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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hello,

I was wondering what your thoughts are on RHT given it's current price ( ~$2.22 as of today). Based on the most recent share count outstanding (81,871,000), this suggests an EV of about $180 MM for a company that is showing 6 month revenue of $1.1 MM. While I know that early stage companies are based on what the future holds, I also like to keep an eye on what EBITDA needs to be (in the future) to justify valuations. For instance, in the case of RHT, if one believes that within the next 12-24 months they can achieve EBITDA of ~ $12 MM, then this would suggest that today it is trading at a EV/EBITDA multiple of 15 based on future results. EBITDA of $12 MM in turn is achievable if they can hit ~ $20.5 MM in gross revenue with a 78% gross margin (as per most recent financials) and no increase in cash expenses of $4.0 MM annually, as 6 month financials suggest ~ $2.0 MM in cash expenses. In short, does your modelling of RHT suggest/indicate that this is a realistic expectation, and that within the 12-24 month time frame they can reach ~ $20 MM in gross revenue with no margin compression and no increase in cash G&A costs ?

Thanks!
Read Answer Asked by Mike on March 13, 2018
Q: Hello 5i team; Any new thoughts on PEO and BYL. I am getting a bit impatient with both of these as of late. I am down 14% on BYL and 5% on PEO since buying them. I know you think highly of PEO. Do you feel it is consolidating after the previous run up or is there material weakness building in some regard? I am looking for near term catalysts to get these 2 stocks moving. BYL from my take should have numerous new avenues of growth after its recent takeover stemming from the whole roster of products acquired and now being able to sell them to their "approved" customers, in which Advantech never could because it didn't have the rights (from what I have gathered from company statements). Anyways just looking for some guidance if I should just hold on and ride these 2 out or sell and move on....
Read Answer Asked by Shane on March 13, 2018
Q: In Nov IRO.v reported TTM EPS of $0.11USD for Q3 & it closed on Friday at $0.485. It appears to be extremely cheap with a P/E of roughly 3x. Fundamentals have been improving each quarter. They have some debt from the transformational acquisition of Papillon in 2016 but have been paying it down rapidly in 2017. With these key points above, I think it deserves some further consideration.

Another subscriber had asked about IRO in January & 5i said “At less than $10M market cap, we would completely avoid IRO.” Yes I agree, it’s a very illiquid microcap but that does not concern me because I’m not buying million of shares. I recently purchased a few thousand shares in my TFSA account. I thought it has potential to be a 4bagger this yr. Do you really think it should be avoid & why?
Read Answer Asked by David on March 12, 2018
Q: I have significant tax loss on PHM, losses that are not usable. I have reduced my position but still have a large quantity of shares such that a penny makes a difference to me. Is it worth to wait and see (ride it out)? Does PHM.ca even have a PULSE or was this whole thing a scam? Very difficult to find info on PHM and they don’t want to respond to questions on next date it will report results.

Is it worth keeping VMD.ca the split-off company – Viomed seems to have some activity but if the same people are behind it , is it vulnerable or does it have some reasonable prospects for future growth?
Read Answer Asked by Adam on March 09, 2018
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