A nanocap that keeps on truckin'
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Roll on highway, roll on along
Roll on, Daddy, 'til you get back home
Roll on family, roll on crew
Roll on, Mama, like I asked you to do
And roll on, eighteen-wheeler, roll on (roll on)
AirIQ is a tiny business by almost anyone’s standards regarding publicly listed stocks. It has a market cap of $11.6M (CAD) and an EV of $8.78M due to a hefty amount of net cash on hand. It is highly illiquid so don’t expect to be able to trade this thing. For some perspective it has a 50 day average volume of less than 15k shares, equating to around $5k dollars per day.
Located in Pickering, Ontario and traded on the TSX Venture exchange, this one is likely one you’ve never heard of and for most it is not something they will be interested in due to its size. This is one of the reasons why I own it.
This business has been operating for 25 years. It is profitable, growing, has high insider ownership, a high percentage of its revenues are recurring and it trades at a discount to any comparable large business. It has created value for its shareholders over the long term. As you can see, total shareholder returns have been over 800% in the past past decade.
What They Do
According to AirIQ the sales pitch is the following:
“AirIQ offers an end-to-end wireless solution which allows customers to manage their assets on a cost-effective basis.”
They sell hardware to new and existing customers, primarily in the trucking industry in Canada and some in the US. They also then sell recurring revenue software that acts as a platform and can also be integrated into others to help these businesses monitor, track, log their data with regards to asset monitoring.
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One way to consider business quality at first glance is to check gross margins. Not only their absolute value but the stability over time. High quality businesses take a commodity or something with a stable cost (reflected in the cost of goods sold) and turn it into something that they can sell with a control over their price. This is something valuable to their end customer. AirIQ has suffered a setback in sales after 2020, likely due to changes to the industry and a bump just prior. After 2020 however, sales have been reaccelerating and gross profit has come along. Gross margins took a wobble at this time but interestingly, operating margins were quite stable and actually continued to slowly increase over time, a testament to the management team, in my opinion.