Trading at 0.45× forward revenue and projecting 50% revenue growth with 12%+ EBITDA margins in 2026, this company is one of the most under-the-radar AI stocks on the market
I believe they’re still cheap. Sure, they aren’t as cheap now after going up almost 100%, but they’re not even trading at 1x NTM revenue and have strong plans to keep taking advantage of the AI trend. I think this might be a good time to trim if the position has become too sizeable or if you want to secure some gains. It makes perfect sense considering that, at the end of the day, it’s a risky microcap. That recommendation does not mean, at all, that the potential is over.
They have strong growth prospects for the next two years. I wouldn’t call this one a clear 5-year hold like Nebius or AMD in the AI category, but they’re certainly a microcap that can benefit significantly in the mid-term. I’ll update my views on it in the portfolio update that is going live soon, and I may decide to trim my position after reviewing it in more depth.
At face value, I can say that if execution is good, they can go higher and still not be overvalued. It will all depend on the contracts announced in the coming months/year. If they fail to secure attractive contracts, you can expect me to exit the position, something I would update subscribers about.
Dear Daniel, thank you for this interesting write-up. May I ask you what is your take on all the various risks and uncertainties described in the company half-year financial report 2024/2025 on pages 46 to 50 (e.g. possible difficulties in sourcing rare earths and metals, dependency on few customers, dependency on key personnel)?
Hello. I'm glad you found the write-up interesting.
As with any company, there are risks. And as a microcap, those risks are naturally magnified. The risk of rare earth material supply is a concern for any tech hardware firm. Supply resilience becomes harder the smaller you are. And with a small team, the loss of even a single key talent can have an outsized impact. This is a company that builds its value on technology and know-how. That’s exactly why they were chosen by their large U.S. partner.
Since landing that major contract, it’s clear they’ve become highly concentrated on a single customer. So yes, there are risks. They're greater, for sure, but not by a lot compared to peers trading at much higher multiples.
For example, SMCI also has customer concentration, although not to the same extent, but on top of that, they face legal issues and have a history of poor management. I believe 2CRSi trades at a discount not just because it’s smaller and riskier, but because the market hasn't yet recognized the potential risk-adjusted upside. SMCI still commands a premium despite its flaws, while 2CRSi is priced much lower, even though it avoids some of their issues.
This is a small, higher-risk company trying to leverage its strengths to benefit from a massively growing industry. A lower multiple is fair, but if they execute well and hit their guidance, even a conservative scenario where it trades at 1x sales and 7.5x EBITDA suggests a potential 100% return from here.
A big part of the upside will depend on what comes next. They've secured a major growth catalyst, but the next leg of their story remains uncertain. Still, I believe a company with the right positioning, technology, manufacturing capabilities, and domain expertise could have a much higher ceiling in today’s AI infrastructure boom.
As always, diversification and caution matter. In my view, adding an under-the-radar microcap with solid fundamentals isn’t a bad move, especially with so many stocks trading hot right now. While I like concentration, this wouldn’t be a large position for me because of the risks. But for an investor seeking alpha in microcaps with AI-fueled upside, I believe this company checks the boxes.
Hello, it has run up a lot recently, how do you evaluate its merit now?
I believe they’re still cheap. Sure, they aren’t as cheap now after going up almost 100%, but they’re not even trading at 1x NTM revenue and have strong plans to keep taking advantage of the AI trend. I think this might be a good time to trim if the position has become too sizeable or if you want to secure some gains. It makes perfect sense considering that, at the end of the day, it’s a risky microcap. That recommendation does not mean, at all, that the potential is over.
They have strong growth prospects for the next two years. I wouldn’t call this one a clear 5-year hold like Nebius or AMD in the AI category, but they’re certainly a microcap that can benefit significantly in the mid-term. I’ll update my views on it in the portfolio update that is going live soon, and I may decide to trim my position after reviewing it in more depth.
At face value, I can say that if execution is good, they can go higher and still not be overvalued. It will all depend on the contracts announced in the coming months/year. If they fail to secure attractive contracts, you can expect me to exit the position, something I would update subscribers about.
Dear Daniel, thank you for this interesting write-up. May I ask you what is your take on all the various risks and uncertainties described in the company half-year financial report 2024/2025 on pages 46 to 50 (e.g. possible difficulties in sourcing rare earths and metals, dependency on few customers, dependency on key personnel)?
Hello. I'm glad you found the write-up interesting.
As with any company, there are risks. And as a microcap, those risks are naturally magnified. The risk of rare earth material supply is a concern for any tech hardware firm. Supply resilience becomes harder the smaller you are. And with a small team, the loss of even a single key talent can have an outsized impact. This is a company that builds its value on technology and know-how. That’s exactly why they were chosen by their large U.S. partner.
Since landing that major contract, it’s clear they’ve become highly concentrated on a single customer. So yes, there are risks. They're greater, for sure, but not by a lot compared to peers trading at much higher multiples.
For example, SMCI also has customer concentration, although not to the same extent, but on top of that, they face legal issues and have a history of poor management. I believe 2CRSi trades at a discount not just because it’s smaller and riskier, but because the market hasn't yet recognized the potential risk-adjusted upside. SMCI still commands a premium despite its flaws, while 2CRSi is priced much lower, even though it avoids some of their issues.
This is a small, higher-risk company trying to leverage its strengths to benefit from a massively growing industry. A lower multiple is fair, but if they execute well and hit their guidance, even a conservative scenario where it trades at 1x sales and 7.5x EBITDA suggests a potential 100% return from here.
A big part of the upside will depend on what comes next. They've secured a major growth catalyst, but the next leg of their story remains uncertain. Still, I believe a company with the right positioning, technology, manufacturing capabilities, and domain expertise could have a much higher ceiling in today’s AI infrastructure boom.
As always, diversification and caution matter. In my view, adding an under-the-radar microcap with solid fundamentals isn’t a bad move, especially with so many stocks trading hot right now. While I like concentration, this wouldn’t be a large position for me because of the risks. But for an investor seeking alpha in microcaps with AI-fueled upside, I believe this company checks the boxes.
Thank you, Daniel, that's great.
How would you buy this stock in a Schwab account on NYSE?
It's not available for purchase on the NYSE. It trades on the Frankfurt and Paris exchanges. Sorry for the inconvenience.