October 2019


Stock I'm watching this month:-

NEA - Nearmap Ltd

Sector: Information Technology
Market Cap:  142.43 Million
Price/Earnings: N/A
Price/Book: 15.05
Return On Equity: -25.6%
Return On Assets: -5.9%
Debt/Equity: N/A

Reasons to watch: Nearmap provides geospatial map technology (think Google Map but at high resolution). The company has been growing rapidly since inception, along with the stock price. However, when the FY19 result was announced, the share price retraced although it had a revenue growth of more than 40%. This can happen when a stock is priced for perfection. FY19 also saw the company achieve free cash flow positive. In my opinion, this is an inflection point and the company is more or less derisked (or at least got a lot less riskier). Therefore, the fact that the stock was sold down was quite baffling and is a good opportunity to buy into the company.    

Risk: High resolution map is a niche market. Therefore, total addressable market may not be huge. As Google map provides data for free, there is no incentive to pay for map data unless you need it in high resolution and with constant updates.

Sentiment: Buy
Disclosure: Held
Current Price: $2.95
My Strike Price: $2.95 (Morningstar Fair Value Estimate: $4.87)




Disclaimer: This does not constitute any financial advice or stock recommendations. As always, Do Your Own Research.

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