Emerging Growth Story in the Small Cap eCommerce Space

EMERGE Commerce Ltd. (TSXV:ECOM) has a pipeline of potential acquisition targets that would combine for about $58 million in EBITDA, says one analyst

Capital Ideas Media | June 29, 2021 | SmallCapPower: Recent tech stock selling has created some appealing buying opportunities, especially among the more speculative names.

(Originally published on Capital Ideas Media on May 11, 2021)

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Subscribers with a strong stomach for risk might want to consider shares of EMERGE Commerce Ltd. (TSXV:ECOM).

EMERGE acquires and operates direct-to-consumer (D2C) North American eCommerce businesses in niche verticals, such as groceries and golf, that either are underserved or have a unique way of operating. Its online brands include TruLocal, WagJag.com, and JustGolfStuff.ca.

ECOM shares are down more than 43% year to date (to its current price of $0.99), even after the Company reported a 121% year-over-year increase in its 2020 revenue to $9.2 million, while swinging to positive EBITDA of $0.8 million for the year from negative $0.6 million in 2019.

Raymond James analyst Steven Li, who has an “Outperform” rating and a target price of $2.75 per share on EMERGE, said he expects the Company’s first-quarter 2021 financial results to look “good,” partly due to its TruLOCAL premium meat subscription service that achieved growth of more than 116% year over year with continued profitability in February.

He also noted that EMERGE’s pipeline of potential acquisition targets would combine for about $58 million in EBITDA.

“With over $20 million cash (after the $12.1 million private placement), we believe ECOM has plenty of firepower to advance its acquisition pipeline in 2021,” Mr. Li said.

The Raymond James analyst is calling for EMERGE to generate 2021 and 2022 revenue of $33 million and $38 million, respectively, and 2021 and 2022 EBITDA of $1 million and $2 million, respectively.

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