Good Morning, Trader!
You know dentists make big bank, right? Sebring Software Inc. (SMXI) is as close as we get to a pure play on the lucrative end of tooth care.
SMXI has rolled up 31 orthodontist practices in Florida and another 3 family dentistry operations in Arizona in barely the last year.
Those of you who paid the kids’ braces bills won’t be surprised to hear SMXI is already “revenue positive” with cash flowing in the mid-7 digits!
But even with the PPS up here above $0.30, the chart is telling me that SMXI has barely started to achieve its M&A ambitions:
First thing I notice: the indicators tilted up on Friday and now the RSI in particular is nudging into official 50+ “bull territory.”
SMXI also brushed within 1 penny of the 200-day ceiling on Friday so historical resistance looks soft -- last time it cracked, PPS touched $0.50!
So this tank has plenty of technical fuel in case a bit of news sparks the market’s fancy. And that goes back to that dental empire SMXI is building!
Two weeks ago, SMXI raised another $1.4 million in dry powder from insiders in order to “execute its initiatives,” which I think means more M&A.
In the past, SMXI has grabbed whole dentist groups for $400,000, so this cash could EASILY fund 2-3 more acquisitions.
Now it’s been a while since SMXI closed its last big deal so I imagine the management team is chomping at the bit to find the next one.
If so, just about any deal SMXI can make has the power to kick out massive free cash flow, given the economies of scale in the dental world.
Very few independent dentists can build any equity in their business because the costs (and their own salaries) are so high.
And famously92% of dentists fly solo so they’re motivated to sell. They keep their paycheck and get a decent cash payout, maybe SMXI stock.
Then SMXI gets to work grinding down costs across the network and streamlining the common “back office.”
So far they’ve managed to squeeze 5% out of their burgeoning empire before they take their cut -- but every new office they add helps.
Can SMXI keep moving the needle? With tens of thousands of dentists to buy out and a market cap barely 4 times revenue, I’m optimistic.
And with that in mind, go back to that chart and tell me SMXI gives you no reason to smile today!
See you soon!