Converge Technology Solutions (CTS.TO), mcap=1.5bn, price $7.10 vs $7.41

$CTS.TO pitch:
– Consolidator of IT service providers with 30+ acquisitions since 2017.
– Successful roll-up that is able to extract cost & revenue synergies from its acquisitions as well as generate high-single-digit organic growth.
– Currently sits at 11x EBITDA, which does not incorporate recently completed acquisitions.
– Expected to continue growing through M&A and could double in size over the next 3-4 years.
– Further M&A will be financed by internally generated FCF and equity raises are being replaced by the recently announced share buyback.

$CTS.TO valuation:
– Trades at 11x EBITDA and continues to grow through M&A and organically.
– Management expects C$5bn in revenue and 10% EBITDA margins in a few years.
– The stock would triple if these targets are reached even without any multiple re-rating.

Exp. gain: Not specified.

Full CTS.TO write-up (free guest account required):

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