TOP IDEAS: WANTED Technologies Corp. (TSXV: WAN) is undiscovered in the investment community but not amongst the business community.
WANTED Technologies Corp. (TSXV: WAN - $0.31) products and services are "wanted.” The Company recently reported for fiscal 2012 that 2,387 Human Resource (HR) professionals subscribe to use its real time business intelligence online tools, a gain of almost 1,700 users from the year prior.
WANTED Technologies' online analytical tools, WANTED Analytics™, are for the talent marketplace. WANTED Analytics™ provides relevant employment-related data to offer detailed insight into the supply and demand for workers of any type in the United States and Canada. Corporate HR, Staffing, Government and Media sectors use WANTED Analytics™ to find candidates for hard-to-fill positions, for detailed compensation data and to analyze competitive and market activities to locate high-potential talent.
Management of WANTED Technologies has said their product tools make for more effective business decisions to recruit and retain the best talent. They say this makes organizations more efficient and saves money while achieving their human capital objectives. Big business agrees as UPS, Starbucks, GE, Microsoft, Johnson & Johnson, Comcast and T-Mobile (amongst many others) are all clients of Wanted Technologies.
The Company's products and services are mostly delivered electronically via annual subscriptions. The majority of WANTED Technologies revenues (88% in 2012) are recurring annual fees tied to the number of individual users (subscriber seats) within a client's organization. WANTED Technologies' recurring revenue base grew by 36% in fiscal 2012 to $6.3 million, driven by new product advances for the Corporate Human Capital marketplace. The Company's Management reports that its client retention rate is very strong for subscription renewals.
Fiscal 2012 was a watershed year for WANTED Technologies. In Q3, the Company returned a profit and in Q4 WANTED Technologies reported record-high quarterly revenues of $1.81 million and earnings of $273 thousand or 0.01 per share. In Q4, the $395 thousand of earnings before interest, taxes, depreciation and amortization (EBITDA) was 22% of revenues: the economies of scale from having higher sales levels. Expectations are that Wanted Technologies' recurring revenue base will expand further which should translate in higher profits levels for fiscal 2013.
The move to profitability at WANTED Technologies has gone largely unnoticed by the investment community, which presents a tremendous opportunity for small cap value investors.
By annualizing Q4 results, WANTED Technologies' current stock price currently trades at a very inexpensive Enterprise Value (EV) / EBITDA ratio of 3.4 times for a growth company. Therefore we recommend that shares of this Company should be accumulated up to $0.55, which is equivalent to seven times Enterprise (EV) / EBITDA or approximately 12 times earnings per share. Please note that these valuations are based on historical results which ignore future growth, hence the possibility of significantly more upside potential for investors.
Not to be overlooked is the strength of WANTED Technologies' balance sheet. As of June 30, 2012 the Company reported it had of over $2.1 million in cash and investments against a nominal amount of debt. The Company generated over $800K of positive cash flow from operations in fiscal 2012.
Two notables and positive for investors: management and directors own over 11% of the Company's stock and WANTED Technologies has only 24 million shares outstanding.
WANTED Technologies website: www.wantedtech.com
Author ownership disclosure: TSXV: WAN - Long
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