Why Investors Could Triple Their Investment on this Microcap Stock
Symbol: OTC Markets: LEAI
EPS: $0.45 (ttm)
Revenue: $96.5 million (ttm)
Market Cap: $20 million
Shares Outstanding: 20.8M
Shares in Float: 2.6M
Cash: $4.7 million (mrq)
It’s not often we see an OTC Markets microcap stock with $96.5 million in revenue and $7.4 million in net income. Legacy Education Alliance (OTCQB: LEAI), a financial education company whose seminars and materials are based largely on the best-selling book “Rich Dad Poor Dad,” could have done an IPO to the NASDAQ, but instead they chose a quicker, less expensive route, a reverse merger, a process used by many small-cap companies to go public. Thus, the stock will probably trade at a discount to its peer group until it is listed on the NASDAQ. The stock is currently averaging 15,000 shares a day, trading about 550,000 shares over the last 39 trading days. But the Street is still largely unaware of this story. Only now are the financial sites integrating the correct financial data on the company.
Founded in 1996, Legacy Education provides professional education enrichment in the areas of real estate investing, financial instruments, and personal finance, with the goal of empowering its students with real-world, practical knowledge. With students in over 100 countries, 900,000 people have participated in its Rich Dad Education Workshops and Seminars since 2006.
2014 was a good year for the company, with revenue up 13.4% to $96.5 million and net income up 70% to $7.4 million. Legacy Education is continuing to expand its brand internationally, opening up 16 new countries over the last 18 months.
We looked at nine online education companies, including Rosetta Stone, which has a $168 million market cap and trades at 22.6x trailing earnings. As of today, Legacy Education is trading at around 3x its 12-month trailing earnings of $0.45 per share. Their competitors trade anywhere from 12x-24x trailing earnings. At a 6x P/E the stock would trade at $2.70. At a 12x P/E, the low end of the comp set, the stock would trade at $5.40.
Consumer and business spending on e-learning products and services has been growing at an annual rate of 7.6% since 2011 and is expected to reach $51.5 billion by 2016. We expect to see continued double-digit revenue and earnings growth over the next several years for Legacy Education.
Buying stocks before Wall Street discovers them is how the microcap superstars have always made big money. You can read my book of interviews with the top players in the microcap space, which includes Dr. Phil Frost, #145 on the Forbes 400 list of the richest people in America, Dave Maley, who runs the Ariel microcap fund, Michael Corbett at Perritt Capital, Bill Hench at Royce Funds, and many more. Collectively these men manage billions focused primarily on small and micro-cap stocks. All of them will tell you that they made their money in small-caps by being first in markets, discovering companies early, many times before the institutions began accumulating the stock, which is exactly when retail small-cap investors want to position, before the institutional buying drives the stock closer to its fair market value.
As a financial media and investor relations firm focused on small-caps and microcaps, we give retail investors the opportunity to position in small-caps before they are discovered by Wall Street’s small-cap professional investors. Take a look at our top 20 small-cap performers, and you’ll understand the importance of what I am saying. Legacy Education Alliance represents an opportunity for smart investors to get in early before Wall Street figures it out and before a NASDAQ listing. The numbers speak for themselves. This stock is undervalued by any measure: OTC Markets: LEAI
Disclosure: Legacy Education Alliance (LEAI) is a client of RedChip Companies, Inc. LEAI agreed to pay RedChip Companies, Inc. a monthly cash fee for twelve (12) months of Investor awareness services designed to help small-cap companies communicate their investment characteristics. RedChip investor awareness services include the preparation of a research profile(s), multimedia marketing, and other awareness services. Dave Gentry is long 75,000 shares of LEAI.
Disclosure: Legacy Education Alliance (LEAI) is a client of RedChip Companies, Inc. LEAI agreed to pay RedChip Companies, Inc. a monthly cash fee for twelve (12) months of Investor awareness services designed to help small-cap companies communicate their