Q: Despite the companies small market cap, the stock price seems to be gaining traction with some new orders. Can I have your opinion of TMG going forward. Thanks
5i Research Answer:
TMG has shown significant volatility over the years, but in general has been trending up since 2009. It is a very small name, but it generates sales and has grown its top line multiple-fold since 2015. It generates some profits and has a decent free cash flow of $2.9M over the past 12 months. Its balance sheet is OK and debt levels are manageable. The stock price has tended to trade sideways for years and then sees an impulse move higher, followed by a sharp contraction. Its valuation is fairly expensive here, and given its history of sharp pullbacks, we would be cautious at these levels, although it could continue higher based mostly on momentum.