Opinions Stephen Takacsy, B. Eng, MBA
MDF Commerce Inc.MDF.TOPAST TOP PICKMar 22, 2021
Stock price when the opinion was issued
As of May 22, 2024. Market Open.
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His biggest position. Not happy with KKR's offer of $5.80. Worth more. Still time for a higher bidder to come forward. Early days for digitizing procurement systems. De facto leader in that space. He's not selling, counting on biggest shareholder to negotiate a higher price.
It develops business to government and e-commerce platforms. It is the number one player in the U.S. and has some recent, very significant contract wins. It is a great turn-around story and is now profitable with positive free cash flow along with 80% of revenue being high margin. He sees good growth. Buy 2 Hold 2 Sell 0
(Analysts’ price target is $4.56)Still likes it, tremendously undervalued. Leaders in Canada and US. 6% market share in US, a nascent market. Recently announced 2 significant US contracts. Robust pipeline of states looking to digitize. Trades at barely over 1x revenues. EBITDA positive, improving every quarter. Lots of room still.
Still owns it. Came down with all tech stocks, and they made a costly acquisition. Also have an e-commerce business with clients like Sobeys; he thinks MDF may sell this and become a pure e-procurement company. He sees upside, because they have valuable businesses they can sell. Shares remain cheap. Growth will resume in the US with a recently acquisition.
(A Top Pick Apr 28/20, Up 137%) They offer e-commerce services for big, complex companies like Sobeys and IGA (vs. Shopify which serves small businesses). They just scored a huge deal with Aldi (https://www.globenewswire.com/news-release/2020/12/14/2144279/0/en/Aldi-signs-agreement-with-mdf-commerce-for-the-implementation-of-Click-Collect-grocery-service.html). MDF also enables supplier to bid on government contracts. They do a lot of M&A in this segment. About 80% of sales are highly recurring, yet the stock trades at only 2.5x sales vs. Shopify's 35x. True, the smaller MDF isn't growing as fast as the bigger Shopify. MDF should be trading much higher. Growth is speeding up as businesses move online.