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  5. NCI: I would like your thoughts on NTG Clarity Networks (NCI), a small company that has been profitable for a few years now, and is showing triple digit growth in revenue, EBITDA and profit for 2024, ye... [NTG Clarity Networks Inc.]
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Q: I would like your thoughts on NTG Clarity Networks (NCI), a small company that has been profitable for a few years now, and is showing triple digit growth in revenue, EBITDA and profit for 2024, yet trading under 10 times earnings. Today they put out an interesting wrap up of their activity in 2024. Is their concentration in Saudi Arabia a big risk?
Asked by Dan on January 16, 2025
5i Research Answer:

Many small companies, historically, have seen big customers in the Middle East only to find out that orders do not come in as expected (COV was a big example of this several years ago). This is not to say they are all bad, but investors do tend to discount many foreign customer orders. Market cap is now $69M, after a 700%+ one year gain. It has no analyst coverage and is very cheap as noted at 10X earnings. Revenue and EPS have tripled since 2021. Cash flow is positive (but small). Insiders own 27% directly and another 13% through a holding company. It has had some recent contract wins and the shareholder letter was positive. The stock has done very well in the past five years (it hit 5c in the pandemic). However, we do note that over 10 years it is up only 4%, even with big recent gains. It hasmany good qualities, and the momentum is impressive, but there is size, liquidity, sector and customer risk here as well.