YB new stock pitches (Tue, Mar 18)

Robot Payment Inc. (4374.T) is a Japanese subscriptions payment business offering payment gateway and automated billing services for recurring revenue businesses. Founded in 2000 and listed in 2021, the company has grown revenue from ¥1B to ¥2.7B, with a target of ¥4B by 2026. The company plans to increase EBIT margins from 17% to 31% through productivity improvements, including reducing customer acquisition costs and employee turnover. With a 30% insider ownership, 35% ROE, and 18% YoY growth in 2025, Robot Payment trades at 25x P/E (22x ex-cash). The company's growth is driven by the shift to cloud systems, online payments, and the electronic book preservation act. Recent initiatives include a factoring service for SaaS clients and a fee-based service to bypass deposit wait times. Despite complex cash flow accounting due to temporary client fund holdings, the company maintains minimal working capital and has recently repurchased 3.2% of outstanding shares.

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Quest Resource Holding Corporation (QRHC) is a national waste management provider for Fortune 1000 companies, trading at a significant discount despite strong fundamentals. The company has secured eight new clients in 2024, expanded existing accounts, and built a robust pipeline, benefiting from secular sustainability trends. QRHC's revenue is stable with three-year average contracts, providing strong visibility. The company has transformed its business model, focusing on higher-margin clients and investing in automation, which has expanded margins and is expected to generate $3 million in recurring savings by FY25. New CEO Perry Moss is driving growth, leveraging his industry experience. With a price target of $3.96 at a 10x multiple, QRHC offers significant upside potential. Risks include client concentration (30% of revenue from two customers) and a high debt load, though the company has refinanced its debt and prioritized repayment. The recent selloff presents an attractive entry point for this under-the-radar opportunity.

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Cantaloupe, Inc. (CTLP), a leader in self-serve commerce, reported strong Q2 results with subscription fees up 14.1% and transaction fees up 17.15% year-over-year. The company is expanding into high-ticket verticals and international markets, with adjusted EBITDA growing 26% YoY. CTLP is exploring a potential sale with JPMorgan, and the base case price target is $12.80 (70.2% upside) at 18x EV/EBITDA. The business is relatively recession-resistant with inflation-indexed revenues. Key growth drivers include micro-market adoption, expansion into high-ticket verticals, and international growth, particularly in Latin America. Margins are improving, with transaction gross margins at 25.6% (+4.5% YoY) and subscription gross margins at 78.8% (-1% YoY). The company launched Cantaloupe Capital for SMB financing and Cantaloupe AdVantage for digital advertising. Risks include increased operating expenses due to recent acquisitions and potential short-term stock price volatility if the strategic review is unsuccessful.

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