$OFLX short pitch:
– Cyclical COVID beneficiary at 45x peak earnings.
– Manufacturer of flexible piping to connect gas to appliances.
– Old technology that stopped gaining market share 20 years ago.
– Only 4.5% revenue CAGR between 2007-2021.
– Historically traded at 20x multiple.
– Insiders own 68% and are selling stock.
– A hedge fund with 10% ownership is also reducing its position.
Valuation: Assuming mid-cycle earnings at $2/share (vs $2.6 during perfect 2021) and 20x multiple (in line with pre-2017 levels when valuations still matered), +$2/share in cash, we get $42 target.
Exp. gain: 65% to $42/share.
Full $OFLX write-up (free guest account required):