Immediately Actionable Idea #2: A High Quality Company Trading At Under 4X Cash-Adjusted Earnings

An undiscovered company trading at under 4 times earnings when adjusting for the company's large cash balance.

Hello Capital Light readers!

This week, Capital Light is pitching what we believe is a highly undervalued stock.

Conviction Level: Medium

Risk Level: Medium, High liquidity risk

Immediately Actionable Idea #2 has the following characteristics:

• IAI #234 is a Belgian microcap trading on the Brussels exchange with a market cap under $400M USD

• This stock has very low liquidity. It is likely only suitable for small individual investors. Bigger individual investors and smaller funds may have difficulty acquiring a position in this one.

• This company holds over half its market cap in cash and is paying this out as a dividend over time. This may provide investors with significant downside protection.

• This company is overlooked due to being in a sector that is generally considered low quality. Unlike peers, however, this company spends little on capital expenditures and consistently earns high returns on capital, making it a high-quality business in the space.

• The CEO recently bought out sibling shareholders and now owns over 50% of the business. Capital Light believes the CEO is now more incentivized than ever to increase the stock price.

• Ex-cash, this business trades at an absurdly cheap multiple of 3.2X 2024’s net income.

• Capital Light believes this is one of the cheapest high-quality companies in the entire world.

• Capital Light believes there is at least 50-100% upside in this stock immediately to a high single-digit multiple of earnings adjusted for cash.

• Capital Light believes this business can continue to reinvest and grow into their consistently growing backlog, while also increasing distributions to shareholders.

Let’s dive in!