IDEAS: Once a turnaround play, Avante Logixx Inc. (TSXV: XX) has an eye for
making strategic acquisitions. Stock is up 73%.
share price accumulation target of $0.40 for Avante Logixx Inc. was reached on
January 7, 2014. For the record, we do not revise share price targets for our
Investorfile Top Ideas - Small Cap Value Stocks. We have positioned our blog to
be one of the first providers of a pragmatic perspective of a small cap company
stock's potential worth, where there may be uncovered value that has been
largely overlooked by the investment community.
admit, our initial motivation to invest in shares of Avante Logixx Inc. (TSXV:
XX - $0.38) was the value in the stock price when the Company became profitable. (See -
Avante Logixx: Post-turnaround stock provides value for growth investors). But
now there is another reason to own this stock.
Logixx provides best-in-class residential and commercial security services including
system design and installation, rapid alarm response, alarm monitoring, video
analytics and secure transport through the use of advanced technology and a
focus on client service.
Logixx was once a turnaround project several years ago. Then the new co-CEO and
major shareholder (George Rossolatos) committed to renew the Company's focus in
servicing its security market niche by steadily increasing its recurring
revenue stream generated from monthly security monitoring fees in order to grow
profitably and build cash.
cash being generated from the successful turnaround of the Company's operations
and the closing of a $5 million equity financing last year provided Avante with
the financial resources to grow faster. Today Company Management believes there
are significant opportunities for Avante to grow through acquisitions and to
consolidate the security industry, build market share and recurring revenue
streams while improving operating efficiencies with the view to increase
question becomes: Can the management team who executed Avante's turnaround grow
the Company by successfully making and integrating acquisitions?
indications are: Yes!
Logixx recently reported fiscal 2015 Q3 financial results and held an investor
conference to discuss the same. These quarterly results fully reflect the
Company's first acquisition: INTO-ELECTRONICS (INTO), a Toronto based commercial and high-rise
security integration, monitoring and electronic building management firm. With
the inclusion of INTO, Avante's revenues jumped 30% to $2.95 million for the
quarter, of which the recurring revenue portion rose 40% to $1.12 million,
comprising 38% of total revenues.
the acquisition of INTO, the financial outlook for Avante Logixx is robust. Key
takeaways from the Q3 results, Management Discussion & Analysis( MD&A)
and investor conference call confirm this notion:
1. Avante expects significant growth in
fiscal Q4-2015 (March 31) and fiscal Q1-2016, both in the recurring revenues
stream as well in revenues from security installations. INTO has a growing
backlog and the revenue contribution to date is tracking higher than management
2. Significant cost savings will materialize
over the 6-12 months as INTO and Avante consolidate their business
administration and security monitoring operations within Avante's existing
3. The cross-selling opportunities between
Avante and INTO as envisioned at the time of acquisition are beginning to
more interesting (from management comments on the investor call) Avante continues
to actively pursue numerous acquisition opportunities, and if all goes well,
could close its second acquisition (mostly likely similar in size and scope as
INTO) within the next 60-90 days. Management disclosed that the Company has
about $5.2 million in cash on hand. Avante has a nominal amount of bank
our first blog post about Avante Logixx the shares are up 73%. The stock already
exceeded our price accumulation target of $0.40 last year but has retreated a little since. That said, for small cap investors who are still accumulating this
stock, in our opinion the current price does not reflect the Company's capacity
to close on several more acquisitions. If those acquisitions prove to be successful
(like INTO), the stock value could appreciate significantly higher than our
original target price of $0.40
Avante Logixx has approximately 74.8 million shares outstanding.
Avante Logixx website: www.avantelogixx.com
Author Ownership Disclosure: TSXV: XX - Yes
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author's independent analysis and judgment and does not guarantee the
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Logixx Inc. nor has it received any compensation from Avante Logixx Inc. for
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The author of this article has acquired and may trade shares of Avante Logixx
Inc. through open market transactions and for investment purposes only.