Q: What is your opinion of Zoomd Technologies as a high risk/high reward part of a small cap portfolio?
5i Research Answer:
ZOMD is a $39M market cap name, revenue has been declining over the past couple of years, but free cash flow is positive, margins are OK, and it trades at a decent valuation of 13X trailing earnings. On a quarterly basis, its recent quarter was strong, with 58% growth year-over-year, and some of its strong execution can be attributed to discontinuing several operations that no longer aligned with its vision, helping it to focus on its core operations. Momentum is good, and we would be OK with it as part of a small cap basket of several stocks, and while acknowledging its small cap risks and position sizing.