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Bulls are starting to run towards XBC.

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junkHustler Member Level  Monday, 02/18/19 01:17:09 PM
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Bulls are starting to run towards XBC.

From Cantech:

2. Xebec Adsorption – A manufacturer of equipment that transforms raw gasses, such as the off-put from landfills, wastewater treatment facilities, and farms into renewable natural gas and hydrogen. The company has a strong backlog in Italy and France as a result of EU government’s pursuit to reduce the impacts of climate change. Strong future growth potential exists in the U.S. and Canada through contract wins for new builds and tuck in acquisitions of smaller companies in the $1-$5 million range. This will allow Xebec Adsorption to build out its recurring revenue servicing arm. The company’s competitive advantage is in its technologies ability to recover gasses more efficiently than its competitors, leading to more profitability by its users who can then collect higher gas volumes for resale. The company currently trades at $1.05, with a $71.4 million backlog, and a market cap of $68 million. Revenue in 2017 of $14 million growing to a projected $28 million to close out 2018 shows the company has finally hit an inflection point. 2019 revenue targets are $40 million with 25% as recurring revenue.

Management has a target for EPS of $.05 – $.07 for 2019. My favorite aspect of this company came from when talking to CEO Kurt Sorschak about his greatest fear. His response was if his company gets taken out before it gets to realize its full potential. If a takeover offer occurred, let’s say 50% above market price. His 14% ownership won’t be enough to defend against the instant gratification that shareholders would most likely accept if such a scenario occurred (Kurt is hungry, I like this guy!). In my opinion, considering the defensiveness of the industry and the growth Xebec could experience, trading at 20x 2019 eps would be a fair valuation. If Xebec can deliver, and come out of 2019 with $.06 cents in clean diluted EPS, I see no reason for the company not to trade at $1.20 at a minimum. However, on the risks side, Xebec could experience cost overruns during this high growth period. I currently hold a new position in Xebec Adsorption.

https://robinrspeziale.com/2019/02/16/top-5-investment-ideas-from-cantech-2019-guest-post/?fbclid=IwAR2evlebR1SNd2VAyOtfbKPZhuQpubTLAZhIkD9bC9FEwYCUcXT8iy_RuUU

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