News Details – Smallcapnetwork
Staffing 360 Solutions (STAF) Answers the Organic Growth Question
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February 2, 2024

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PDT

Good afternoon everybody, and welcome to a new trading week. It's sure to be an interesting one no matter what, with a major decision from the Federal Reserve due on Wednesday -- will we get a September rate hike or not? The market/odds say no, but this is a tricky one. We may want to not assume anything, and rather just respond to the chips where and when they fall. There's still plenty to talk about in the meantime though. A few days ago we mentioned the market was toying with a rollover and that it may not be a bad idea to start looking at some names that were apt to do something predictable regardless of what the market does. Our first, best, and only suggestion at the time was to focus on the micro caps until stocks were past all their turbulence. We're reiterating that suggestion today on the heels of incredible news from Featured Stock Staffing 360 Solutions (STAF). Maybe you saw it at the website, or maybe you caught the company's press release. If you didn't do either though, check it out... Staffing 360 Solutions reported preliminary Q1 revenue of $47 million. That's 30% better than the year-ago top line of $36 million, and it's about 7% better than fiscal Q4's top line. The sequential growth is pure organic growth; the most recent acquisition Staffing 360 Solutions made was in November of last year. We don't have all the numbers for the recently-completed quarter in-hand yet. They won't be posted sometime until the middle of October. Matthew Briar does have a long-trend chart of the data that is available though, and we have to say, it looks great. Revenue is growing. Gross profits are growing. EBITDA is growing, and all those other lines on the income statement are growing even faster than sales are. That's the whole point of a roll-up strategy -- better fiscal efficiency through size. This remains one of our favorite growth stories/opportunities. With last quarter's top line of $47 million, the company is on an annualized revenue run rate of $188 million, and it's toying with positive net income. It's already been operationally cash-flow-positive a couple of quarters, and that number keeps getting better. The crazy part: STAF sports a market cap of only $11.5 million. It's a valuation that makes no sense in light of the growth Staffing 360 Solutions is producing, and the numbers it's about to produce. Veteran traders can attest this is a game that requires patience. We think Staffing 360 Solutions is worth the wait. In other news, in Friday's edition we deemed James Brumley over at the Under the Radar Movers newsletter was a trading freak, and he didn't disappoint us today. Another one of his recent picks was up 20% on Monday. They only got into that trade Thursday, translating into a 21% unrealized gain (so far) for URM members. Let me make that clear for you: He suggested the trade only on Thursday, and it's already up 21% thanks to today's 20% gain. The stock in question is PTC Therapeutics (PTCT). I don't mind divulging it now -- and James doesn't either -- because Under the Radar Movers subscribers are so far ahead with their positions it doesn't even really matter if you jump on board at this point. Just know if you're getting into it now, you've got more risk than reward. The point in time when there was more reward than risk was a couple trading days ago, when he was first telling URM members about it. You missed out on PTC Therapeutics? Don't let the new big, fast winner get away. Become an Under the Radar Movers subscriber today, and start getting more out of the market tomorrow. Oh, by the way.... the Alphatec Holdings (ATEC) that was up 20% on Friday translating into a 29% gain for the Under the Radar Movers crowd on Friday? Brumley sold it today for about a 31% profit. That's a 31% profit in only about a month's time. It doesn't get much better than that. As far as the market goes, I'm neither impressed by the early bullish effort nor concerned about the failed effort to rally once the bears took control. More than anything investors are on the fence here, waiting for the Fed's news on Wednesday. The good news is (and as the Under the Radar Movers newsletter pointed out today), it's quite clear where the market's support and resistance is. if what happens on Wednesday is juicy enough, it WILL sling the market out of its rut. Where are those lines in the sand? Again, you'll have to become a member of the URM newsletter to get the specifics. I will tell you, however, it wouldn't be terribly hard to figure out where the floor or ceiling is for the S&P 500. On that note... Brumley offered this caution last week but I'll reiterate it today - don't assume the knee-jerk reaction to Janet Yellen's decision is the one that's going to get traction. It could just be a headfake, setting up a big reversal in the other direction shortly thereafter. You really may want to wait for the market's lines in the sand to be decidedly broken before jumping to any conclusions. That may not happen until Thursday. Any guesswork between now and then is little more than a coin toss. Talk to you tomorrow.