Geodrill Limited (GEO.TO), mcap=$149m

GEO.TO pitch:
– Drilling company providing sample extraction services for gold miners in Africa and South America.
– Trades at 2.4x TTM EV/EBITDA despite highly recurring revenue, and positive FCF while growing both the revenues and earnings at a decent clip.
– The low trading multiple should expand as investors realize we are at the beginning of a long cycle of growth for the industry.
– The increasing free cash flow allows GEO to continue returning capital to shareholders through dividends and share buybacks.
– An attractive target to other drillers due to its long-term relationships with mining companies.
– CEO with 39% ownership of GEO said openly that he is open to sale at 5x EBITDA or more.

GEO.TO valuation:
– In a sale scenario GEO is worth at least 5x E2024 EBITDA, which implies a C$7.3/share price target.

Exp. gain:

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