Industrials

Report by Pernas Research

The future digital manufacturing leviathan - XMTR came to market too early and at too high a price, which has contributed to a near 85% sell-off over the last 3 years. Sentiment has clearly soured. However, the market is being overly punitive re. its business fluctuations and is even mischaracterising its business model. Investors are missing the fact that the company is a major lever on the massive digital transformation silently underway in non-contract manufacturing. XMTR will continue to scale and exhibit operating leverage as it grows revenues. The stock is already up 25% since being added to the Pernas Portfolio in early July, but plenty of upside remains.

Industrials

Report by Two Rivers Analytics

AEIS features as one of the top short candidates in Two Rivers’ ‘Breaking Estimates Model’ - the power electronics industry faces increased competition, pressuring AEIS’ sales and margins. The company posted lower than expected results when it announced earnings last quarter and all four of its business segments have now seen a decline in revenue during both Q3 and Q4. Estimates have been sliding all year but have taken a sharper turn down this past month. Margins have been falling since 2017, yet are forecast to turn on a dime now and increase immediately to 17% adjusted EBITDA. The stock trades at historically high multiples of sales and earnings. Other short ideas include LGI Homes, MP Materials and Xometry.

Industrials

Built for the good times - demand has just begun to fall off which will expose the hyper-cyclicality of XMTR’s business. Long term, the company services, contrary to what bulls think, the smallest of niches within the 3rd party manufacturing ecosystem…essentially prototyping, a single digit percentage of the overall R&D budget of its customers. The structural design of XMTR’s business model will prohibit it from breaking into any meaningful production business…yet the crux of the bull story rests on this thesis.