Quality Investment Ideas to watch in October
High-Quality Investment ideas from my investable universe at attractive levels
Welcome to this new post. As always, you can expect one free idea followed by three more (two not in my current portfolio) for paid subscribers. Here are my previous idea posts:
Free Idea of the Month: Mensch und Maschine $MUM.DE
Mensch und Maschine (German for Human and Machine) is a German small cap with excellent execution that just delivered another good quarter. The company grew revenues by 39% in Q3 and EBIT by 25%. MuM is a software, consulting and system integration business focusing on construction and engineering software like CAD/CAM/CAE and BIM. It targets markets similar to those of my portfolio company, Nemetschek. Here I also went into more detail on the end market and opportunity.
MuM is focused on Europe (92% of revenue), with 60% of revenue in the DACH (Germany, Austria, Swiss) region. DACH is generally underdigitized, creating an opportunity, but it also poses a risk with the uncertain future of the European economy. MuM generates high (25%) ROICs and has grown revenues at a 10% CAGR, with profits at a >20% CAGR over the last decade. The company aims to continue growing profits at a 15% clip over the next five years. At a >5% FCF yield, MuM looks like an attractive opportunity, which I am considering for my portfolio. My biggest worry is the extensive reliance on the DACH economy.
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