One way to determine if a microcap stock is appropriately valued is to compare your stock valuation vis-a-vis other microcaps. While a direct comparison based on numbers could be deemed arbitrary because they have different businesses and you argue different potential, it does provide you an indication if there has already been substantial premium built into your stocks price.
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Stock Code
Stock
Price
Share Base (mil)
Mcap (mil)
Annualised Revenues*
Mcap/Rev (times)
NPAT (mil)
Major Contract
Customer Traction
1
OEC[/B]
ORBITAL CORP
$ 0.580
77.37
$ 44.87
$ 21.00
2.14
$ 2.20
YES
YES
2
MYE
MASTERMYNE
$ 1.230
101.10
$ 124.35
$ 201.72
0.62
$ 5.59
YES
YES
3
YOJ
YOJEE
$ 0.083
950.61
$ 78.90
$ 0.42
186.09
-$ 5.93
NO
LOW
4
BUD
BUDDY PLATFORM
$ 0.110
1,149.05
$ 126.40
$ 2.08
60.65
-$ 12.80
NO
LOW
5
LVT
LIVETILES
$ 0.405
551.57
$ 223.39
$ 5.69
39.29
-$ 23.10
NO
YES
6
* excluding grants & interest income
Here I provide an example.
If you compare what I deem to be yesteryear's darling stocks YOJ/BUD/LVT, you can see they do not provide much value. All 3 have minimal to low revenues, huge losses and absence of major contracts. For half the valuation of LVT, MYE has generated $200m in revenues and have a $5m profit. For about half the valuation of YOJ, OEC has 10x its revenue and already secured a major long term contract with a subsidiary of Boeing (USA).
More revealing is the market cap/revenue ratios of these stocks. OEC and MYE are only trading at 2.14x and 0.62x of their revenues which suggest great value- compare that against YOJ at 186x, BUD at 60x and LVT at 39x.
