RCMT - RCM Technologies: Big Fish In A Small Pond

2024-06-03 23:52:07 ET

Summary

• RCM Technologies is an obscure microcap that has seen its share price grow over the last few years, after being a penny stock.
• RCMT stock has a history of cyclicality in its financials, with growth in revenue and free cash flow occurring across cycles.
• The company operates in the specialty healthcare, engineering, and life sciences & information technology sectors, focusing on the middle market. Its success, therefore, lies in being a big fish in a small pond.
• While the downsides are small, the real issue here is getting the best price and riding the cycles to seize on undervaluation.

RCM Technologies ( RCMT ) is an obscure microcap that I haven't seen discussed before I came across it. While these tiny companies rarely excite folks, they are often where tremendous value can be found and huge mispricing can occur. Take a look at the history of its share price.

While it traded as a penny stock for most of the past decade, it saw sudden improvement, currently trading just under $20. Those who saw this chance just a few years ago could have gotten a great return on this sleeper stock. The question, then, is if RCM the business can still deliver the kind of earnings growth that led to this price appreciation....

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