The more research I do, the more excited I get about this company.
The hospital cleaning services industry is extremely fragmented. There is not a single major player from my understanding, and it seems like most hospitals and medical offices contract out. Most of the companies providing these services are using traditional methods. Since the prevalence of hospital infections is rising, clearly these methods are not very effective.
Additionally, with the aging population, you are going to have more hospital visits which in turn entails more risk for infections spreading and thus more need for thorough cleanings.
And the hospital portion is just one stream of revenue. They also can sell to schools, food processors (which they have already), hotels, restaurants, and oddly the oil and gas industry. The R/M here is great and all, but I would have invested in this Co. with or without the R/M. R/M simply brought attention to a company that fell through the cracks.
For reference as well (and all IMO), I figured I would place some near terms price targets... Revenue for TTM is going to be north of $400k. To be conservative, I am going to assume a 3x revenue multiplier (highly underestimated). On that basis, PPS would be (400k * 3)/(106mm shares outstanding). That gives us roughly .012 which is what the price is today (I commend the market for accurately pricing an OTC play for once). What that valuation misses however is the substantial growth that this company could achieve. In fact, it barely assumes any growth at all. If you assume even twice the annual sales (likely to occur this year) and a more realistic revenue multiple for what these types of OTC plays generally demand, buying shares now and holding could result in a substantial payday.
