NTG Clarity Networks (NCI.V)

Similar to CGI Group, but operate in and around Saudi Arabia. Have grown a lot in recent years, but sold off in recent quarters because they are investing a lot in their business, which pressure profits. When they win a contract, they first hire the staff, but sometimes the start date is pushed so they have to keep paying staff. NCI is winning larger contracts. High inside ownership. Likely, another company will buy this, so that's good. Trades at a low PE.

EPS of 4c matched estimates; revenue of $20.86M beat estimates of $19.1M. EBITDA of $2.49M missed estimates by 24%. Sales rose 42% and gross profit rose 32%. Income margin slipped to 9% to 14% as the company became taxable. Operating cash flow was $3.4M. 2025 revenue guidance of $78M was affirmed. We would consider the quarter OK, not great. The stock is cheap but its small size and weak performance this year is likely limiting investor interest.
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IT services. Like a "baby" GIB.A. Based in Toronto, but provides services mainly in the Middle East and mostly in Saudi Arabia. Diversified customer base. Sub-$100M market cap. Growing topline extremely fast, profitable, nice balance sheet. No dividend.

He likes to come on the show and sometimes present a name that investors haven't hear of. Only 1 analyst covers it; that will probably change. Over time, stock should move higher as awareness grows and valuation will expand.

(Analysts’ price target is $3.00)

NCI just issued an equity offering at a price of $1.4 for aggregate proceeds of $5.2M. The size of the offering is quite large (10% of NCI's market cap) relative to previous years’ equity issuance of around $1M. The purpose of the issuance could be to fund growth and take advantage of the record valuation in its share price. 

NCI just recently raised guidance for FY2024. NCI expects revenue to be around $55M, an increase of 10% over the previous projection of $50M, along with a revised net income margin to 14% from 10% previously. The result is driven by a sustained and rising demand from new and existing customers.

Overall, NCI is demonstrating strong execution, NCI is an interesting, profitable growth story that has shown solid momentum. But its market cap is just $50M, a really small and illiquid stock. We would be comfortable to add to NCI over time as the company continues to execute and we would be willing to average up.
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Spoke to the CEO recently. Have a nice little business. Kind of a service provider to utilities and telcos. Write software pieces that help them send bills to their customers. The trouble is, they don’t have one source of revenue, sort of a patch of many different things. Also, they are capital constrained and need to raise money. It is hard to predict where the earnings are going to come from.