Hi there,
LTE is one that is currently on our watchlist. We like the company and its potential however the current spike in cases and risk of shutdowns in the UK and elsewhere is likely weighing on the stock. The company did see an impact last quarter as a result of the lockdown and it will again if we see meaningful pandemic curbing happen again. The biggest impact, is the delay in new contracts. These are short-to-mid term headwinds for the company and it may take some time to resolve.
That being said, the company has a strong backlog ($56 Million over the next 24 months). Expectations is for revenue to grow to ~$75 million in 2022. That is a equal to annual growth in excess of 100% over the next couple of years. It is only trading at 0.5 times FY 22 times sales. The company provides fibre optic network services to major global communications companies which supports wired and wireless rollouts. In such a way, it is an indirect play on the rollout of 5G. The company is a strong partner of CityFibre (UKs 3rd largest wholesale broadband provider) which has earmarked $11 billion towards building out its network. The awarding of contracts has been delayed, but based on past successes, it is definitely well positioned for several more contract wins. Once new contracts are announced, and assuming LTE is succesfull in winning some, it could be just the catalyst the company needs.
The company is also looking to expand through acquisitions here at home in Canada. The company is often compared as a cross between a construction and communications company. So valuation should be somewhere in between the low ratios of a traditional construction company and the higher valuation that those in the fibre network industry command. Regardless, it is trading at a discount to both.
As a small cap that trades on the venture, it is likely to be highly volatile. This is definitely not for the defensive investor but for those with an aggressive and higher risk tolerance.
Mat