TOP IDEAS: If current trends continue, WANTED Technologies' (TSXV: WAN) stock could be a big win for small cap investors. Stock price is up 55%.
Investofile prides itself as a blog for uncovering value that has been largely overlooked by the investment community. WANTED Technologies Corp. (TSXV: WAN- $0.48) is a perfect example. Since we first profiled this stock as one of our Top Ideas just three months ago (See: WANTED Technologies: A small cap that is delivering sales growth, profits and yet is still value priced), the Company has delivered, and no more so than in the most recent quarterly financial results for fiscal 2013.
WANTED Technologies' Q2 results make small cap investors smile. The Company reported revenues up 25%, EBITDA margins of 25%, the fourth consecutive quarter of profitability and a very strong balance sheet. Dig deeper and discover that 93% of total Q2 revenues ($1.73 million) are recurring. Recurring revenues are up 23% from a year ago.
So what is driving this trend? About 3,500 (and growing) Human Resource (HR) professionals in Corporate and Staffing sectors (majority within US) who subscribe for WANTED Analytics™, cloud-based solutions for relevant employment-related data, in the Human Capital Market (HCM). There are 120,000 HR professionals worldwide according to the HR Certification Institute, not including the hundreds of thousands of employment professionals in the recruiting sector.
WANTED Analytics™ products fall in the category of "big data” for the HCM market, says the Company. Big data analytics is the process of examining large amounts of varying data to uncover hidden patterns, unknown correlations and other useful information. The HCM market is evolving towards solutions that involve "big data” for work force analytics to improve the way a company finds, hires, engages, develops and retains its employees.
Work force analytics is a growing market. In a recent Report on Business – Globe and Mail article (See: Mining data to find and keep the right people) it states that big company executives want their HR departments equipped with information on the statistics and data that support their company's hiring strategy. This must be true: UPS, Starbucks, GE, Microsoft, Johnson & Johnson, Comcast and T-Mobile (among many other big organizations) subscribe for WANTED Analytics™, according to the Company.
The business outlook remains optimistic for WANTED Technologies according to the Company's Management's Discussion and Analysis (MD&A) filing for Q2 of fiscal 2013. The Company states that business conditions in the USA for the employment market continue to improve and Corporate HR departments are beginning to hire employees in greater numbers while seeking additional services to support these efforts.
Given the positive trends, WANTED Technologies' recurring revenue base is poised to get bigger; therefore, as the recent financial reports suggest, this Company will continue to become more profitable. This is very good news for investors.
The shares of WANTED Technologies are trading up 55% since we first recommended this stock on October 24, 2012.
WANTED Technologies has 24 million shares outstanding.
WANTED Technologies website: www.wantedtech.com
Author ownership disclosure: TSXV: WAN - YES
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