Double Feature Report, Insider Ownership
Day one was green, and we anticipate more to come
Good day everyone,
We are continuing our coverage of this week’s “double feature” on SigmaTron International, Inc. (NASDAQ: SGMA) and Newgioco Group, Inc. (NASDAQ: NWGI), two companies with similar value and growth attributes.
In Monday’s trading session, SGMA finished the day up 4.04% at $3.35 /share and the high for the day was $3.63. The shares were green all day with traded volume at 210K shares. NWGI finished Monday’s session up 4.07% at $2.30/share with a high of the day at $2.37. Traded volume was 471K shares.
We want to start today by assessing the stock ownership of both companies. Examining the ownership of public companies can be crucial in determining the direction a company may be going. Insider buys indicate confidence in the company’s future, as well as the potential value in the share price.
Institutional ownership is different because investment funds generally gravitate toward companies that may indicate a near term to mid-term price appreciation.
SigmaTron International, Inc. (NASDAQ: SGMA) shares (4.2M outstanding) are 22.30% held by insiders and 21.25% held by institutions. CEO Gary R Fairhead is the largest insider shareholder along with five company directors. Three investment funds own 15% of the company led by Renaissance Technologies at 6.07%.
It is noteworthy that on October 1st, 2020, nine insiders at the company exercised stock options on a total of 509,000 shares at $2.03 each. That indicates a lot of confidence.
At Newgioco Group, Inc. (NASDAQ: NWGI), institutional ownership is virtually nil, but insider holdings are a whopping 67.5% of the outstanding shares. In fact, insiders have purchased 265K shares in the past six months.
We need to recount some of the metrics that indicate these two companies represent a value at their current price:
SigmaTron International, Inc. (NASDAQ: SGMA)
Perhaps the most telling ratio pertaining to SGMA shares is the price/sales ratio. With a market cap of $14M and revenues (ttm) of $267M the current p/s ratio is .05X, which is extremely low and an indicator of oversold shares.
The company has a book value (mrq) of $13.62 per share, or four times the current share price. Companies seen with that level of price/book ratio are rare. Even if the SGMA share price doubled, or tripled, the two ratios would still indicate value range.
We first must understand what gaming revenues mean at Newgioco Group, Inc. (NASDAQ: NWGI). Revenues are the amount of wagers the company gets to keep. While the company reports $32M in revenues, an actual $452M was run through their betting system.
NWGI generated $4.32M(ttm) of levered free cash flow, or roughly 13% of revenues. Their operating cash flow was $1.73M for the same period, or roughly 5% of revenues. A strong level of cash flow is an enviable metric for any company as cash is the asset that gives flexibility in operations and growth.
Growth is the subject we want to talk about next when we issue another report tomorrow. Both these companies have growth initiatives in the works creating excitement within the company and in the investment community. Growth initiatives that could generate multiple near term catalysts.
The Traders News Group
original report below
Two NASDAQ Companies That Look Like Deep Value Plays
Both companies operate successfully and are now entering huge markets
Good day everyone,
Today we want to report on two companies, listed on the NASDAQ, that present, in our opinion, the potential for near term to mid-term gains.
We are initiating coverage on SigmaTron International, Inc. (NASDAQ: SGMA), a provider of electronic manufacturing services (EMS) and circuit board assemblies.
Current price $3.22/share
Outstanding shares (est.) 4.2M
Float (est.) 3.35M shares
52-week range $2.13 to $5.67 per share
Book value $13.62/share
Revenues (ttm) $267M
Market cap $13.6M
Indications SGMA shares may be a value:
The book value is 4.0X the share price
Revenues are 19.0X the market cap
Trading 43% off 52-week high
Lucrative merger pending
Many companies had reduced revenues through the pandemic and SGMA did too. The company made this statement regarding revenues in September, “February was close to forecast, March was a 10% decline, April and May’s decline was 30% or greater, followed by a significant rebound in June and a full recovery in July. The backlog for the second quarter is strong.”
Merger Due to Close Soon
The Company and Wagz, Inc., a private Pet Technology company, entered into a Letter of Intent under which the Company and Wagz would be combined in a merger transaction. Both companies anticipate closing the deal by the end of October.
Wagz developed technology that transforms a pet’s collar and a pet owner’s cell phone into an invisible leash and Wagz’s products integrate satellite, Alexa, and artificial intelligence to monitor location and enhance overall pet health. Pet Tech is the fastest growing segment in the pet sector, expected to reach $24B by 2024, and Wagz is a leader in the field.
Earlier this year, Wagz was awarded a significant contract to design and produce a new, innovative, and revolutionary smart dog collar for a major mobile carrier.
As the chart linked below indicates, SGMA shares have crossed their 50 DMA of $3.06 and are close to crossing their 200 DMA of $3.30/ share. This scenario may indicate potential for a breakout.
About SigmaTron International, Inc.
Headquartered in Elk Grove Village, Illinois, SigmaTron International, Inc. is an electronic manufacturing services company that provides printed circuit board assemblies and completely assembled electronic products. SigmaTron International, Inc. operates manufacturing facilities in Elk Grove Village, Illinois; Acuna, Chihuahua, and Tijuana Mexico; Union City, California; Suzhou, China, and Biên Hòa City, Vietnam.
NASDAQ Report #2
We are also re-visiting a company we initiated coverage on in January 2018 while on the OTC exchange trading at .35/share (Our original 2018 report can be viewed here – https://mailchi.mp/broadstreetalerts/initiating-coverage-35share-massive-revenue-growth?e=[UNIQID]) Newgioco Group, Inc. (NASDAQ: NWGI), a betting technology company operating in Europe.
Current price $2.21
Outstanding shares (est.) 16.6M
Float (est.) 8.8M shares
52-week range $1.09 to $4.40 per share
Levered free cash flow (ttm) $4.32M
NWGI offers a range of leisure gaming services, including lottery, casino gaming, sports betting, traditional online casino games, live online casino games, poker, bingo, virtual sports betting, and horse racing, as well as skilled and interactive games and slots; and owns and operates innovative betting platform software that provides a suite of gaming products.
Some of our members that have been reading our reports for a while may remember when we first reported on NWGI in 2018. At that time, NWGI was an OTC Markets stock trading at $.35/share. NWGI shares were up listed to the NASDAQ on December 27, 2019.
A lot has happened at NWGI since then, most notably entry into the U.S. gaming market. The Company established a Delaware subsidiary named Elys Gameboard Technologies, LLC and has engaged U.S. gaming counsel to commence licensing on a state by state basis for U.S. operations.
Last month the company announced it has obtained the Gaming Labs International (GLI) “Events Wagering System” certification standard GLI-33 for its Elys Betting Platform to operate in Washington D.C.
GLI is the world’s largest independent testing laboratory for lottery and iGaming testing and assessment services.
NWGI experienced a revenue challenge thus far in 2020 due to covid 19. Not only were its betting customers quarantined, but there were no sporting events being conducted.
Current service is approximately 79,000 online user accounts and an indeterminate number of walk-in customers at a combination of the three types of venues: 1,200 web-cafés, 7 corners and 117 agency locations.
The imminent entry into the U.S. gaming market may be a huge catalyst for NWGI shares. The potential for revenue growth is massive. The US online gambling market is expected to reach $94.37 billion by 2025 with a CAGR of 10.28%.
What we like in NWGI shares:
Tiny float can generate fast gains in the share price.
Online gaming in the U.S. is in its infancy
Leveraged free cash flow (ttm) is $4.32M
Shares are trading at 52% off their 52-week high
Insiders own 67% of the outstanding shares
As indicated in the chart linked below, NWGI shares have crossed their 50 DMA of $2.06/share in a bullish manner. NWGI shares are leading their SMA 20 by 20%. These data suggest the shares may be trending ahead of a breakout.
About Newgioco Group, Inc.
Newgioco Group, Inc., is a global leisure gaming technology company operating in 12 countries worldwide, with fully licensed online and land-based gaming operations in Italy. The Company’s innovative alternative wagering system services online operators, resort concept casinos, retail neighborhood betting establishments and franchise distribution networks.
Report updates coming soon…
The Traders News Group
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