11/18/24 - $blde - LT buy under $3.2, going slow11/18/24 :: VROCKSTAR :: NASDAQ:BLDE
LT buy under $3.2, going slow
- have written extensively about this one in the past, so won't dive into details but here's the incremental
- mgmt continues to deliver solid results, turned FCF +ve already and are on track to meet MT targets
- it's in my portfolio sub $3.15 again for a 1.5% size (shares, not options - more on this below), as any risk off event possibly has this retesting $3 again or that $2.8 support, but it's already good enough value for me to begin legging in again
- so what's the way to think about math on this thing w/ such high cash balance (net cash). here's my logic.
- 12 mm "FCF" in '25 seems reasonable. and $30 mm in '26 seems reasonable too.
- let's say $25 mm in '26, and acknowledging we're basically growing FCF at some pretty good pace at that pt, a 10% discount rate would seem to give you enough wiggle room where nobody would argue (AND! assume no growth) that's... 25/0.1 = $250 mm enterprise value
- so let's further "discount" that 250 by 25% to incorporate a '25 YE target and with some (again) healthy conservatism b/c after all, this *is* a small cap and it's more of a market-related risk IMO not a biz risk, so 25%... that's $250/1.25 = $200 mm. $200 mm vs. the EV today of $135 mm is $65.
- so let's add $65 now to the market cap of $250 today... so the implied equity value on this logic at YE'25 would be $315. $315/$250 today = about 25% upside. and that 25% on today's stock price puts us near $4
- so my logic says discount ANOTHER 25% to get YE'24 target and you're basically at $3.2 today (PS - i never reverse engineer my logic! this is where it comes out).
- so buying in the sub $3.5 territory I think is good MT accumulation. Sub $3 better and anywhere in recent support territory $2.8 below is for all practical purposes a "no brainer" and i'd probably be back to a 3-5% position there.
- for now 1.5% feels comfy for a name I know well.
What do u think?
V
