The Misunderstood Compounder I Just Bought
What Happens When The Market Confuses Lumpy Revenue With Broken Fundamentals?
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I’ve just added a new position to my portfolio.
A company that just reported 35% earnings growth year-over-year.
Their CEO owns 17% of the business.
Recurring revenue up 37%.
Gross margins expanding to 78.5%.
Debt-free balance sheet with $4.2 million in cash.
Management reaffirmed 20% annual revenue growth guidance for the next 3-5 years.
And the market sold it off.
The disconnect caught my attention immediately.
While traders panicked over a single quarter’s hardware timing issues, they completely missed the business model transformation happening underneath.
This isn’t some speculative concept.
It’s a proven Internet of Things monitoring business serving critical infrastructure - backup generators for data centers, cell towers, hospitals, and industrial facilities.
Equipment that cannot fail.
The economics are textbook beautiful: 60% margins on hardware sales, followed by 95% margin recurring subscriptions that customers renew at 90%+ rates year after year.
Recent Nasdaq uplisting. Zero debt. Positive cash flow. Insider ownership aligned.
Mr. Market’s sell-off looks like a classic case of mistaking lumpy revenue for broken fundamentals.
The stock is…