Singular Research Fresh Faces: Top Performers with Hidden Growth Potential as of Q2:19


Singular Research Fresh Faces: Top Performers with Hidden Growth Potential as of Q2:19


The second quarter of 2019 was just as wild as the first quarter with threats of trade war, falling interest rates, and global economic slowdown. At Singular Research, we focus on small and micro-cap stocks that are undercovered on Wall Street. These stocks have a niche business model and have yet to be widely discovered. Many of the global threats in the stock market today do not affect these stocks. In the following paragraphs, we describe our top three stocks for the second quarter of 2019, why they did well, and where we see these stocks going in the near term.


The Rubicon Project (RUBI), Price Target: $12.00, EPS Beat: 54%, Upside: 18%

RUBI provides a technology solution to automate the purchase and sale of digital advertising inventory. Sellers (which include websites or mobile apps) provide digital advertising inventory to RUBI’s platform in the form of advertising requests. These ad requests from sellers are sent to buyers, which can then place bids on them.

Second quarter highlights:

  • Q2:19 revenues were $37.9 million, up 32% from Q2:18, on account of stabilization in CPM trends, greater-than-expected strength in audio and video, and favorable year-over-year take-rate comparables.
  • Mobile and desktop revenues grew 42% and ~21% YOY to ~$21.2 million and $16.5 million, respectively. These segments represent ~56% and ~44% of overall sales.
  • Adjusted EBITDA was $4.4 million in Q2:19 vs. a loss of ~$5.4 million in Q2:18, driven by higher revenues and lower operating expenses.
  • Net loss was $2.2 million in Q2:19 versus a loss of $13.3 million in Q2:18. Adjusted EPS in Q2:19 was $(0.06) compared to $(0.27) reported in Q2:18.
  • Management now expects sales growth to be well above its long-term guidance of ~20% growth.

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L.B. Foster (FSTR), Price Target: $30.75, EPS Beat: 70%, Upside: 43%

L.B. Foster Co. engages in the manufacture, fabrication, and distribution of products and services for the transportation and energy infrastructure. The company operates through the following segments: Rail Products and Services, Construction Products, and Tubular and Energy Services.

Second quarter highlights:

  • Net income of $9.6 million, or $0.90 per diluted share, an increase of $0.38 per diluted share over the prior year quarter.
  • Net sales of $200.9 million, an increase of 16.2% over the prior year quarter.
  • Gross profit of $37.1 million, an increase of 12.3% from the prior year quarter.
  • Net cash provided by operating activities for the quarter totaled $4.1 million.
  • Net debt decreased by $2.0 million from March 31, 2019 to $79.1 million.

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Transcat, Inc. (TRNS), Price Target: $27.75, EPS Beat: 21%, Upside: 21%

 Transcat, Inc. (TRNS) is a leading provider of accredited calibration and laboratory instrument services and a value-added distributor of professional grade test, measurement, and control instrumentation to highly regulated industries.

First quarter 2020 highlights:

  • Consolidated revenue grew 15.7% to a first quarter record of $42.4 million, driven by double-digit organic growth.
  • Transcat continued to take market share in regulated markets with Service segment organic revenue growth of 11.9%.
  • Achieved net income of $1.7 million, or $0.23 per diluted share.
  • Acquired calibration automation software company last week to accelerate operational excellence initiatives.

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