Dealmaker’s Diary: An Undervalued Tech Play on Shipping

Alpesh Patel|May 2, 2024

The world’s second largest economy grew faster than expected in the first quarter of 2024.

And with the U.S. Secretary of State just wrapping up a visit there…

We’re looking at a digital freight platform that is revolutionizing the shipping landscape in the region.

Earnings have grown at blistering 60% annual pace… while revenue has grown 35% each year.

The company scores a 9 on my proprietary Growth-Value-Income rating scale…

And the stock is hugely undervalued.

Plus… momentum could lead the stock to an easy double.

As global leaders focus on this region’s economic potential, now is the perfect time to explore this company’s future.

Get the kinds of details I share with my hedge fund clients – that you get for free! – in my latest video.

Click on the image below to check it out.

 

TRANSCRIPT

Hello, friends. Well, with the American Secretary of State in China last week, I thought I’d pick a company that had good data, good numbers, and a link to China. And the company I’ve come up with this week for you is Full Truck Alliance (YMM).

It is a digital freight platform connecting shippers with truckers to facilitate shipments across wide ranges, cargo weights, across China.

Now, it’s listed on the New York Stock Exchange, So you have don’t worry and go, “Wait a minute. How do I get access to a Chinese company?”

It get revenues from shippers’ and truckers’ use of its platforms.

It’s experienced significant financial growth and expansion, as you can imagine.

It’s been growing earnings at a rate of nearly 60% per annum, and those kind of numbers are going to get my attention. It’s forecast to grow earnings and revenues in the years ahead as well.

You’re paying $19 for every future expected or forecasted dollar in profits. It’s not cheap, but it’s certainly by no means expensive.

On my Growth-Value-Income rating, which, remember, is my proprietary algorithm that looks at the valuation of a company, revenue growth and dividend yields. We’ve got a 9 out of 10. As long as it’s 7, 8, 9 or 10, it meets my minimum criteria.

Cash return on capital invested, 6.2%, could be better. Remember, this is that Goldman Sachs wealth management formula that says companies in the top quartile generate about 30% per annum stock price returns. Not every company, not every year, but on average over the long term. Click here to see why it’s so effective.

Sortino, not bad. I’m less bothered about the Sortino and the Alpha.

Volatility a little bit high as you’d expect with Chinese companies.

However, it’s really the Growth-Value-Income rating and the momentum off the back of the chart.

Now you can’t see it as well on this one, but if I were to pull back, the momentum doesn’t look as overbought as it does there.

And I’m looking at that continuing up. We’re talking about, obviously, a penny stock, high volatility, so you know the risk.

I’m looking at this to go from $8 to at least double would take it back to where it was just a couple of years ago.

Here’s the other kicker…

On a discount cash flow basis, which I know can be volatile as a method of valuing companies, it’s 63% undervalued.

So as you know, what I do with GVI Investor, we go a little more in-depth for all of these factors, and we really hone in on them.

This gives you a bit of a bit of a taste of the things that we look for when we do that 360-degree analysis. And so I wanted to share with you, well, a company from a country which is very much in the news.

Thank you very much.