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  5. KUT: What is the reason for the sharp drop in price,on above average volume? [Redishred Capital Corp.]
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Q: What is the reason for the sharp drop in price,on above average volume?I can not find any recent news which might explain this but it seems someone knows something as indicated by the volume.
What are your thoughts on this company now...Buy/Hold/Sell?
Asked by John on September 18, 2023
5i Research Answer:

KUT made a small acquisition on Sept 9, but had no other recent news. The stock fell 28c last week, and is now down 15% for the year. Small caps can move on low volume. Even though volume did pick up, the dollar volume of trading last week was not particularly significant (less than $600,000 total). The company has been growing, but debt has been increasing as it makes acquisitions. Earnings have been volatile, but cash flow is growing. Debt to cash flow is about 3X today. Insiders own 17%, Donville Asset owns 13.5%. We would consider it OK for a micro cap. There is size and debt risk here. It is about 20X earnings, and considering the risks we would like to see it have a cheaper valuation before getting more interested. We could see some tax loss selling into year end. We would consider it a HOLD in the context of the small cap sector.