Consumer Discretionary
From zero to hero - NextAge has, in just two short years, moved from No.3 to No.1 in the used car market in Japan. Its market share is still <7% and Mike Allen no longer sees any meaningful obstacle in the company’s path to 30% share within the next 8 years. Yet the stock has underperformed the TOPIX by 60% in the past year and trades at ~11x EPS. Investors have lost faith in the company’s ability to sustain the same level of sales and profitability per unit as it rapidly expands its outlet base. In Mike's 21-page initiation report, he argues the series of events that gave rise to these fears have passed and are already fully resolved. He thinks fair value could be 3x the current price.
Edition: 193
- 23 August, 2024