OneSpaWorld (OSW), mcap=1111m

OSW pitch:
– Provider of spa services on cruise ships.
– Quasi-monopoly with over 90% of the cruise ship market.
– Long-term 7-10% topline growth.
– Trades at 10-12x 2024 FCF.
– Capital returns coming.
– 100% upside.
– Onshore spa competitors face difficulty replicating OSW’s global breadth and scale.
– Due to relatively minimal expense, cruise ship operators have no incentives to switch or in-house services.
– Historically, churn has been almost nonexistent.
– Expected to initiate a dividend this year or next at the latest.
– Due to minimal capex needs, set to become a cash-flow return machine.

OSW valuation:
– Expected to reach $70-$100m in 2023 EBITDA and $80-$110m in 2024
– This equates to $0.8-$1.1/share in 2024 FCF.
– At 15-20x multiple, that’s $12-$22/share stock.

Exp. gain: +100% to $22/share.

Full write-up (free guest account required):