Motorpoint Group (MOTR.L), mcap=£165m, price £1.83 vs £1.95

$MOTR.L pitch:
– UK used car retailer at 10x PE.
– Management recently initiated a new strategy to double market share by investing in e-commerce tech and marketing, which will result in depressed ST profits.
– Although investors were not excited about this (stock price halved from the peak), management is accelerating investments as the strategy is working and key competitors are fighting for survival.
– Profits are expected to more than double over the next 3 years with the company generating substantial cash and likely launching of buyback.
– CEO owns 10% of the company.

$MOTR.L valuation:
– Expected to earn £40m in net income in FY25 (vs £17m today).
– At 20x PE that would be £9.4/share stock.
– 20x PE is above the historical 11x-17x range but in line with the $KMX valuation.

Exp. gain: 4.5x to £9.4/share in 3 years.

Full MOTR.L write-up (free guest account required):

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