Because of its management pedigree, execution and growth potential, KITS gets a premium valuation. "Waiting" for a better valuation can be risky, as either two things generally happen: 1) The company earnings simply 'grow into' its valuation and the stock never gets a really cheap valuation and investors miss it, or 2) Growth slows significantly or there are other problems which crunch the premium valuation. In this case investors may not want to own it anymore.
Of course, a high valuation in a small cap does add risks. But we would have called KITS expensive a year ago, and it has doubled since then. It has a relatively short history of profit, but P/E has never been below 90X so far. EPS is expected to more than double in 2026, which drops P/E to 57X if it hits its targets. We think this is a classic case of 'own it or don't own it' and not one to worry too much about current valuation. The buyers today are not buying to lose money. Insiders have bought a bit this year as well, and own 26%. We would consider them one of the more 'reliable' management teams. We like the stock. Don't get us wrong: it is a small cap stock and has risks. But so far it has grown almost flawlessly.