OLB Group (NASDAQ: OLB) Share Price: $8.40
• Freshly Listed in August 2020.
Industry: Fintech / Block-chain payments
Revenue: 9.6M ttm
Assets: 15M
Debt: 7.5M
Cash: 4.2M
MC: 54.1 M
S/O: 6.16 M
Float 2.1 M
Key holders:
• Insiders own 65.9%
• Sabby Managment 5.75%
Company Overview
The OLB Group, Inc. operates as a FinTech and payment facilitator company in the United States. It offers OmniSoft, a cloud-based business management platform that provides turnkey solutions for merchants to enable them to build and manage their retail businesses; eVance, a payment processing solution; SecurePay, a payment gateway and virtual terminal with proprietary business management tools; and CrowdPay.us, a white label capital raising platform. The company also operates ShopFast, a cloud-based omni-channel platform that enables consumers to purchase products and services from Websites of clients across variopus business sectors. In addition, it provides ecommerce development and consulting services. The company was founded in 1993 and is headquartered in New York, New York.
Investment Highlights
Established operational footprint in U.S. with $9.6M trailing 12-month revenue
Integrated products and services suite, a blend of Shopify (NASDAQ: SHOP) and Square (NYSE: SQ), with added features and benefits
Solutions used in 130+ industries across all 50 states
23.5M transactions processed in 2018 with a value of nearly $1B
8,500+ merchants use OLB Group’s services nationwide
Executing inorganic and organic growth strategy
Building a portfolio of merchants targeting SMBs; focusing on area of market not on the radar screen of large payment processors
Post-acquisition integration of cloud-based applications and services to increase revenue and profitability of each merchant
Organic growth strategy includes in-house sales and marketing in combination with referrals from small-bank partnerships
Network of integrated blue-chip partnerships
Secured industry-leading relationships with blue-chip partners in all facets of operations; current partnerships include: Visa/Mastercard, American Express, PayPal, Wells Fargo, Chase Paymentech, Elavon, US Bank, Fiserv First Data, Jack Henry & Associates, Vantiv Worldpay, iOS, Android, Microsoft, ControlScan, and more
Reasons why I like it:
• Undiscovered fintech play that is in a hot sector.
• Stable, growing SaaS revenue
• Currently Cash Flow Positive
• Forecasted EPS Positive Q4 2021
• Estimated 30% growth in organic growth in 2021.
• High Insider ownership
• Explosive upside with low float
• Entered Cryptocurrency market with allowing merchants to accept them as payments.
Catalysts:
1) Expansion Internationally. In negotiations with a potential European partner to distribute and sell their software.
2) New Aquistions to accelerate growth - reported that they plan to do at least one in Q1/2021.
3) New Applications and services to fuel organic growth with its existing customers.
4) Positive Q4 earnings.
• In the Q&A interview in 0ctober 13, 2020 the company noted that they expect 10M revenue for 2020. This would lead to approximately 3-3.1M in revenue in Q4 and growth of ~30% Q/Q.
Valuation and upside potential:
The stock is currently trading 7.6x ttm sales. With the FinTech industry average of approximately 10x. High growth companies in the space trade well above that. See $FTFT, it trades almost 800x P/S and stable megacap stocks, Square and PayPal trade 16x sales.
With the company forcasted to reach at least 13M in revenue and EPS positive in 2021, I can see this trading easily 10-15x sales by the end of the year. That would equate to 130-195M market cap, or $21-31 per share. Thats 2.5-3.7X current price in less than 12 months.
Resources:
https://www.redchip.com/events/76/the-olb-group-webinar/OLB
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