Q: This stock is rocketing higher on q2 financials just released. What do you think of it? Despite the gains, first half 2024 eps of 0.13 is very impressive. Risky name but decent small cap opportunity? Thanks.
5i Research Answer:
NCI is very small and risky, but it has been seeing exceptional growth over the last few quarters and profitability is expanding as well. NCI provides digital transformation solutions: software development outsourcing and software products. Majority of revenues are derived from professional services (95%). The company has been picking up many new contracts and purchase orders. The company's work in Saudi Arabia and Egypt have been big drivers of its recent growth. We think it is interesting, but far too risky at this size. Additionally, 97% of year-to-date revenue is derived from Saudi Arabia, which creates concentration risk in a market we are not familiar with. The fundmentals/growth are making it worth watching.