MG - I've been buying MG this morning on what I thought were strong results and good forward guidance. 2023 revenue projected to increase 5.5% at midpoint with adjusted EBITDA projected to increase 25% at midpoint.
The business had a few tough years, exacerbated by high leverage that come on as a result of a few acquisitions in 2017 and 2018. They've been slowly paying off that debt ($70 million repaid over the past 4 years) even as results have been pressured due to lower activity in their oil & gas business. But that business is coming back, along with growth resulting from efforts to diversify from their oil & gas business.
They've also hired Alix Partners to perform operational consulting to find additional margin improvement initiatives. I'm optimistic that they can grow the top line ~5% here for the next 3-5 years and move margins higher by 150 - 250 bps. If they can achieve these improvements, with cash flow being used to continue to delever, I could see this trading in the $15 - $20 range in 2025 - 2026.
Some wood to chop for certain, but I think the risk / reward looks good here in the $5.70's. This used to trade in the 8x-9x forward EBITDA range back in 2015 - 2018, and appears to be a solid buy here at about 5x forward EBITDA.
