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My $INMD trades
New position!
I'm looking to add a few more promising* small cap companies to my portfolio over time, ideally under $1B but a smidge over is fine as well.
About 20% of my positions are small caps or smaller but several of them are dead weight where my thesis is basically broken but the position is so small and the thesis isn't broken enough that it's even worth selling. Some of these include $DMTK, $BFLY, $NNOX, $BGRY, $BARK, etc. The thesis needs to be really broken or I just have to be tired looking at you to get sold (a la $FUBO, $GAN, and $GRWG two weeks ago).
Anyway, on to InMode. I've had them on my Buy? watchlist got ~a year now but they recently popped up on a screener I ran which prompted me to really dive in.
Transaction Journal Entry:
- Showed up on FinViz screener of +20% ROE, >10% sales growth last 5 years, >80% gross margin, and >10% inside ownership. They actually don't have >10% inside ownership; down to ~7% at end of 2021, which was ~26% at end of 2020. Slightly concerning and needs to be watched.
- Services revenue makes up just 12.4% of TTM revenue. Company is building out installed based and services revenue to follow.
- Incredible margins for a company with TTM rev up 41%, profitable, and FCF/S of 45% TTM. Buying back shares as well.
- Optionality out the wazoo. Already has a large TAM and are expanding into non-aesthetic medical procedures as well.
- Services revenue up 84% in 2021 which must continue to grow rapidly which will be evidence of their equipment actually being used by providers.
- Really wish management provided more KPIs in their 10-Q/Ks. Installed user base only found in investor presentations which don't appear to be archived. # of procedures performed like ISRG?
- International expansion ongoing. International accounted for 34% of revenue in 2021, up from 27% in 2020 and 21% in 2019.
- Somehow managed to grow by 32% in 2020. Wild.
- FCF like crazy, buying back shares already. ROE of 49% in 2021. Is this company too good to be true? Financials are just immaculate across the board.
Valuation metrics at time of purchase:
Trailing P/S: 5.64
Forward P/S: 5.03
PSG: 0.07
P/FCF: 13
P/GP: 7
Price of SPY when $INMD trade was executed: 368.44
Price of QQQ when $INMD trade was executed: 277.42
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