ToffCap’s Monday Monitor provides a weekly snapshot of the largest changes in our watchlist. New (potentially) interesting investments and trades are regularly added to the list: companies that screen cheaply, catalyst trades and notable company results which might indicate changes in a company’s investment case. The list is dynamic; it will continue to grow and change going forward. If you have interesting additions to the list, feel free to contact us at contact@toffcap.com or on Twitter.
Enjoy!
Disclaimer. ToffCap’s Monday Monitor is provided for informative purposes only. No due diligence has (yet) been performed on the names on this list. The list might change strongly on a weekly basis. This overview does not constitute advice; always do your own due diligence.
Overview
I. Company watchlist
II. Catalyst trades
III. Notable company results (mostly European)
I. COMPANY WATCHLIST
Annotations for a selection of interesting companies with seemingly strong upside potential.
Additions this week:
Alfen (ALFEN Netherlands – $ 1.7bn). High quality company, providing energy storage systems and EV charging stations, and specialized in grid automation. Recent CMD provided mid-term outlook: at least doubling ebitda over the next 2/3 years. Guidance looks conservative. Trading at ~17x 2023e Bloomberg ebitda for >30% ebitda cagr. Clean balance sheet, self-funding growth. Quality pure-play on electrification / sustainability / ESG trends. Decade+ market tailwinds. Still relatively unknown outside of Europe.
PWSweb (PFSW US – $ 93m). Cheap, busted micro-cap. Trading at 3-4x 2023e ebitda. Stock buyback + strategic review ongoing.
Talen Energy (TLN US – TBD). Nuclear energy play. Will emerge from bankruptcy on 17 May. Many interesting assets, but mostly high quality Susquehanna power plant. Out-of-bankruptcy plays tend to be good opportunities given relatively cheap listed valuations (TLN Plan EV $4.5bn - $ 2.5bn equity cap) + nuclear renaissance theme is a major tailwind.
Surgepays (SURG US – $ 72m). MVNO, provides wireless internet via under ACP program. $4.5m net income in 1Q23 - trading at ~4x p/e annualised while revenue growth should accelerate over next few quarters (+50% yoy). Profitability will continue to improve given much cheaper tablet costs + much lower commissions as store channel ramps (total of $ 15 + $ 40 lower customer acquisition costs vs. ~$ 140 / sub). Write-up here and most recent update here.
Previous additions:
Atlas Energy Solutions (AESI US – $ 1.7bn). Recent IPO. The only public pure play Permian in-basin proppant provider. Screens cheaply. Net cash balance sheet. Sector decimated. Short investment case: AESI is developing the Dune Express, a 42 mile conveyor system. System would massively drop operating costs and generate strong cash flow. Potential to be valued more like midstream company (i.c. double the multiple) + multiple upside if sentiment turns + strong FCF generation potential. Operational risks.
Unit Corporation (UNTC US – c. $ 300m after spec div.). Oil & Gas company. Set for strong FCF generation given good market fundamentals. Could be valued at ~2x ev/ebitda 2023e and 20-30% FCF yield. Insiders own >40%. Shareholder friendly capital return policy.
Oddfjell Technology (OTL Norway – c. $ 200m). Offshore energy service provider. Relatively recent listing. Strong sector tailwinds providing plenty of runway. Cheap (relative) valuation. More info Alexander Eliasson (@alexeliasson).
ADF Group (DRX Canada – $ 55m). North American steel co specialised in designing and engineering complex steel structures for non-resi. Very strong growth in company backlog provides confidence in future potential. Large capex program done; trading at <4x FCF 2023e + good growth ahead.
FitLife Brands (FTLF US – $ 77m). Good progress on ecommerce transition. Acquisition of Mimi’s Rock at attractive valuation. Potentially transformative. Management aligned. Trading at <7x FCF 2023e for >20% growth of ecommerce channel.
Tempest Therapeutics (TPST US – $ 22m). Biotech gamble. Reverse merger in 2021. Recently published first set of promising results. Partnering with Roche.
II. CATALYST TRADES
Event-driven.
Additions this week:
Talen Energy (TLN US). Nuclear energy play. Will emerge from bankruptcy on 17 May. Great tailwinds.
NCR Corp (NCR US). Spin-off of ATM-related business in Oct. 2023. Potential large SOTP value unlock.
Applus Services (APPS Spain). Three PE players as well as activists circling the company.
PFSweb (PFSW US). Strategic review ongoing. To be completed in 2023.
Merrimack Pharmaceuticals (MACK US). To receive $ 225m (vs. market cap. of ~$ 180m) from Ipsen after FDA approval for Onivyde (within 12 months). Cash to be returned to shareholders via special dividends.
MDU Resources (MDU US). Will spin Knife River into a stand-alone construction materials provider. Spin approved; distribution date set for 05/31.
Metals Acquisition Corp (MTAL US). Registration statement finally approved. Vote on 06/05. New copper mine to trade in the public markets; great LT copper tailwinds.
Previous additions:
Cia Brasileira de Distribuicao (CBS US). Spin-off with remainco trading at negative value. Great write-up from Clark Square Capital.
Crane (CR US). Spin-off.
Acrivon Therapeutics (ACRV US). Share unlock: >60% of shares outstanding, mid-May.
ASP Isotopes (ASPI US). Share unlock: >90% of shares outstanding, early-May.
Lastminute.com (LMN Switserland). Exploring strategic alternatives.
Liquida Technologies (LQDA US). Patent litigation. Write-up.
III. NOTABLE COMPANY RESULTS (mostly European)
A selection of comments of company results, potentially indicating a notable change in a company’s investment thesis and / or a dislocation of the share price compared to fundamentals.
Additions this week:
Azelis. Very resilient profitability despite massive comps. One of the best industries out there.
Nexi. Results confirm solid trends; not reflected in the valuation. Valuation 8x NTM ebitda for 10-15% ebitda cagr and strong market position.
Alstom. Confirms ramp up in FCF generation.
Surgepays. $5m ebtida and $4.5m net income over just 1Q. Ramp up expected over the next few quarters, mainly 3Q and 4Q.
Tecnicas Reunidas. $ 150m refinancing completed. Good 1Q results underpinning acceleration of (market) momentum. Write-up here.
Fresenius SE. Strong 1Q, driven by Kabi. Looks to be stabilising.
Outokumpu. Very strong 1Q driven by core stainless steel activities. Lower pricing though much better volumes, indicating end of destocking.
Applus Services. Acceleration of organic growth; all divisions except Automotive. Continued disposal of subdivisions. Relatively cheap + PE circling the company.
Previous week:
Equinor. Strong results. Solid FCF generation and cash return.
Vicat. Strong indications of a rebound of end-markets.
Technip Energies. Share price down after results. Move unjustified in our opinion given strong secular tailwinds.
Moncler. Stellar results. Growth momentum intact. No signs of recession here.
Logista. 2023 guidance already revised upwards. Quality compounder that keeps performing, trading at LDD p/e.
Trigano. Strategic deal announced to acquire housing unit Bénéteau.
IAG. Good cost control + reassurance of potential deleveraging.
Software AG. Takeover battle (finally).
Thanks, I appreciate your work enormously.
I won't be able to comment on every article of yours, and it would eventually prove to be tiresome for everyone if I did, but I'll make sure to hit the like button each time you publish.