Immediately Actionable Idea #3: A Hidden Japanese Microcap Gem
Why this founder-led, capital-light operator could deliver outsized returns of 70% within 12 months.
Hello Capital Light readers!
Capital Light has discovered a potential opportunity in a GARP Japanese stock.
Conviction Level: Medium
Risk Level: Medium
Immediately Actionable Idea #3 has the following characteristics:
The stock has good liquidity, but has a market cap under $100M USD. Thus, this idea is suitable for individual investors and funds that are able to invest in stocks under $100M USD in market cap.
The company has experienced accelerating revenue growth in the previous three quarters, with each exceeding 55% YoY. Previous growth rates were in the 40-50% range. Capital Light believes the company can sustain a high growth rate for the next quarter, and 15-20% annual revenue growth going forward after that.
Capital Light believes this company can sustainably earn returns on capital (ROC, ROA, ROE, ROIC) in excess of 30%.
This company is founder-CEO-led, operates with a capital and asset light model, generates strong free cash flow, has had zero dilution since IPO, and a clean balance sheet with $10 million USD in net cash.
This company has less than 30% customer penetration in its core vertical, leaving a significant growth runway going forward.
Key competitors are losing market share as this company scales.
Capital Light believes there is 70% immediate upside for the stock price today, and potential for multi-bagger returns over the next 5 years.
Platforms like TIKR, Koyfin, and Fiscal.AI aren’t updated for the company’s most recent quarter, leading to the company not yet showing up properly on screens.
Let’s Dive In!