If you haven’t familiarised yourself with Pointerra Ltd [ASX:3DP] yet, you may want to…
This small-cap has been on a tear since last July. Storming from around 5 cents per share, to an all-time high of 92.5 cents in February.
A 1,750% gain in a matter of months!
And while the Pointerra share price has cooled off more recently, the momentum behind this stock is still strong. As can be seen by the 24% rise today alone.
So, let’s talk about what’s fuelling this latest rally…
Record results and positive cash flow
First and foremost, here’s a rundown on Pointerra if you’re unaware, with a handy Q&A section provided by the company. Here’s just a snippet to get you started:
- ‘What do we do? We manage, analyze and monetize other people’s 3D data for them.
- ‘How do we make money? People pay us to manage their data, to develop or source analytics to make sense of their data and they share revenue with us when we help them to monetize their data.’
Can I just say, this kind of information is a breath of fresh air compared to most companies. A plain and simple explainer without the hyperbolic jargon that gets to the point for investors.
But I digress…
The takeaway is that this is a tech company. One that specialises in collating and extracting value from 3D data via a range of tools such as LiDAR.
And, more importantly, they’re winning over customers with their expertise. Reporting record cash receipts for the March quarter, totalling $1.37 million. More than doubling their previous quarters effort of $0.64 million.
So, that’s some pretty great sales growth, albeit from a low base.
In other good news though, the company was also cash flow positive for the quarter. With a net gain of $0.21 million from operating activities.
Plus, with some big projects in the pipeline — driven by increased infrastructure spending from the government — the coming months are looking good.
All of which appears to have helped revive the stocks upward momentum.
So, should you invest?
What investors need to be aware of when it comes to Pointerra
Now, while there is clearly a lot of market jubilation around Pointerra right now, investors do need to be a little cautious.
While the strong cash receipts and positive cash flow news is good, there wasn’t any update on the company’s annual contract value (ACV). A figure that they have apparently earmarked for a future update that will coincide with insight into their enterprise sales.
According to management, these details should be made public sometime before 30 April.
So, we won’t have to wait long at the very least.
My only query would be why they’ve decided to publish it separately. Because while they may have just needed more time, they may also be stalling for some reason.
I’m not saying that is the case; just that it may be a possibility.
Either way, current investors can be happy with today’s result. While prospective buyers may want to hold off for a while, at least until we get the ACV numbers.
Because while Pointerra is certainly an interesting company, they are heavily overvalued. Carrying a price to sales ratio (when extrapolating their most recent results) of roughly 10 or greater!
A truly outrageous stat that suggests investors are betting big on the hopes for long-term returns.
For that reason, I’d suggest keeping an eye on Pointerra, but maybe giving it a pass for now.
Instead, you should check out our latest report on five AI stocks to look at on the ASX. Explaining in detail why these five companies all have the possibility to become the next BrainChip. As well deliver some staggering returns.
To find out more, including the names of these five stocks, check out the full report here.
For Money Morning