3 Long Ideas From Our Chartroom

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Includes: FNKO, GSKY, UPLD
by: Singular Research
Summary

FNKO, GSKY, and UPLD are technically attractive based on rising relative strength and on - balance buying data.

May possess other attractive factors such as better-than-expected EPS, upside EPS revisions and trade at a discount to our fair value model.

Have posted better-than-expected EPS last quarter.

Funko Inc., CLA (FNKO): recent price $21.66 - Fair value $26.64

FNKO has been described as a "Public index of pop culture". FNKO provide a pop culture merchandising solution for licensors, retailers, and consumers. Core products are collector figures of pop culture influencers in sports, music, movies, and gaming. Not hit-driven, FNKO licenses and builds from a broad and diverse portfolio of hundreds of pop culture figures, with no character or campaign exceeding 6%, thus providing more consistent growth. Private equity firm ACON owns nearly 40%. Paul Allen Group owns over 4%. Last quarter, FNKO beat EPS estimates by 28% up over 110% y/y, revenues by 17.7%, up over 38% y/y, beating estimates in five of the last six quarters. Management has increased guidance for 2019 to revenues of $810-825 million +18-20% and adjusted EPS of $1.05-1.15. FNKO just acquired board game creative leader Forrest-Pruzan to develop new products leveraging FNKO's licensing franchise. E-commerce is growing 45% y/y and now exceeds 15% of total revenues. Also, FNKO's low-cost manufacturing in China and Vietnam drives superior operating and net profit margins at 2x the toy industry norms.

2-stage growth valuation model inputs: TTM EPS $0.82, Discount risk factor 11%, projected 5-year annual EPS growth rate, 20%, PE 22 = Fair value $26.64

OVERVIEW

FNKO

Price March 2019)

$21.66

Price Target

$26.64

EPS

Growth Rate

Projected EPS

Discount

0.82

0.2

2.040

11%

Beta

Market Return

US Treasury

20

1.12

6%

3%

22

GreenSky Inc. CL A (NASDAQ:GSKY): recent price $13.32 - Fair value: 17.31

GreenSky Inc. is an emerging, rapid growth fintech company that provides real-time point-of-sale financing technology that delivers review, approval, customer onboarding within sixty seconds. It serves focused verticals of home improvement and elective healthcare, a total addressable market of $600b in the US, yet has only penetrated less than 2% of this market to date. It currently has about 15,000 merchant relationships, helping them increase sales with promotional financing. It completes the financial process with no physical papers or signatures in a 100% digital format. Last quarter, it surprised by 6% vs. consensus EPS and by 5.8% to revenue estimate. Revenues were up 22% last quarter, and analysts expect EPS growth of 28% in 2019 and 28% in 2020.

2-stage growth model inputs: TTM EPS: $0.58, discount risk factor 11%, projected 5-year annual EPS growth rate 15%, PE 25 = Fair value $17.31

OVERVIEW

GSKY

Price March 2019)

$13.32

Price Target

$17.31

EPS

Growth Rate

Projected EPS

Discount

0.58

0.15

1.167

11%

Beta

Market Return

US Treasury

20

1.12

6%

3%

25

Upland Software Inc. (UPLD): recent price $41.43 - Fair value: $48.01

Upland Software Inc. is a provider of cloud-based enterprise work management software. The company provides a family of cloud-based enterprise work management software applications for the information technology, process excellence, finance, professional services and marketing functions within organizations. Its software applications serve a range of enterprise work management needs, from strategic planning to task execution. It services customers ranging from corporations and government agencies to small- and medium-sized businesses. Its customers operate in a range of industries, including financial services, retail, technology, manufacturing, education, consumer goods, media, and telecommunications.

UPLD trades at a significant discount vs. Peers based on consensus estimates

March-19 NTM UPLD Peers

PE - 19.14 56.71

EV/EBITDA 14.01 29.73

EV/Sales 5.18 9.42

UPLD beat EPS estimates last quarter by 18%. EPS estimates have risen by 10% for q1 2019. Last quarter, EPS growth accelerated from 52% the previous quarter to 57% and revenues also accelerated from 42% in q3 2018 to 62% in q4 2018.

2-stage growth valuation model inputs:

OVERVIEW

UPLD

Price March 2019)

$40.00

Price Target

$48.01

EPS

Growth Rate

Projected EPS

Discount

1.7

0.2

4.230

12%

Beta

Market Return

US Treasury

20

1.31

6%

3%

20

Disclosure: I am/we are long UPLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.