Investing for gains isn't as complex as many fee-based advisors want you to believe. In fact, making money in the stock market can be boiled down to one simple rule- invest in the right stocks, in the right sectors, at the right time. Do that, stay true to an investment conviction, and more often than not, results will keep a portfolio green. Sound oversimplified? It's not. Professional investors do it all the time, even going on pay-to-play television to tout their unpolished finds. They're in the industry, so , yes, they have quite an advantage. But, not an absolute one. There is a market where retail traders play on a level playing field. And if they do their homework, their portfolios could outperform even the top echelon of so-called Wall Street gurus. How?
By seizing an opportunity that most institutional investors don't get; investing in low-priced stocks positioned for exponential growth. Put more simply, it puts stocks trading under $5.00 in the sweet-spot of retail investor opportunity. Granted, most of these “penny stocks” come with high risk and little reward. But not all of them. There are quite a few exceptional companies that meet the rule above. Infinite Group Inc. (OTCQB: IMCI, $IMCI) is one of them. Right stock, right sector, right time. In fact, this OTCQB stock does more than check the requisites for investment consideration; they present a compelling case for how and why they are tapping into the multi-billion cybersecurity space faster and deeper than even its staunchest bulls expected.
Thus, don't be misled by its micro-cap share price; IMCI has all the pieces to become a revenue-generating juggernaut in a red-hot cybersecurity sector. Better still, that mission is in progress, which does more than put 52-week highs in its near-term crosshairs, but all-time highs as well.
Massive Cybersecurity Market Opportunities
Those aren't overzealous targets. Instead they can be considered quite reasonable from a market with no shortage of significant revenue-generating opportunities to go around. In 2021, the cybersecurity services market reached $165.78 billion. The better news is that it's showing no signs of slowing, with analysts modeling for a combined cybersecurity services market to eclipse the $366 billion mark in the next six years. But, with geopolitical unrest suggesting the increased likelihood of cyber-conflict over boots on the ground military, even that lofty projection could be conservative.
Still, even if the market stalled at near the $400 billion level, it's going to take more than a small handful of companies, including the power behind industry behemoths Cisco Systems (NASDAQ: CSCO, $CSCO), IBM (NYSE: IBM, $IBM), and Microsoft (NASDAQ: MSFT, $MSFT), to serve a global market. And for anyone that thinks IMCI isn't ideally positioned to contribute to the cause, think again. They absolutely are part of the supply chain equation. In fact, being fundamentally sound, well-capitalized, having cutting-edge cybersecurity technology, and managed by industry experts, IMCI is exceptionally well-positioned to cash in on the booming demand. Moreover, in a sector where size doesn't matter- expertise does, Infinite Group is as well-positioned as any to stake a substantial claim in a massive market.
That's what they're doing. And alongside penetrating a massive global market with state-of-the-art cybersecurity technology, they are also doing it the right way by understanding the market dynamics. To better explain how that's a value-driver, it's essential to comprehend that IMCI isn't in business to install cookie-cutter security platforms. Instead, they are in business to design and deliver what many others can't- a company-specific cybersecurity defense platform that protects a company's valuable assets from the inside out.
It's a differentiation that brings significant competitive advantages to the IMCI proposition. Further, its advantages from being nimble provides an inherent ability to do what many large industry companies can't. Create, at scale, a one-of-a-kind platform to meet targeted and specific needs. Many think that's the norm. However, far from it. Many cybersecurity platforms are simply modified versions of an original. While effective, they indeed have vulnerability to most recent cyber threats. Remember, those bad actors evolve as well. So, an effective cybersecurity platform a year ago may be entirely ineffective today.
Therein lay the exposed IMCI market opportunity. They understand that the sector can't thrive on a belief that what's good for one is suitable for all. And instead of following along with that faulty premise, IMCI tacked in a different direction to take advantage of the low-hanging opportunities from the thousand, even millions, of businesses that need what IMCI is selling. Of course, servicing a million jobs is unrealistic. But, inking deals with thousands of small to medium sized businesses certainly isn't. Thus, while the large-caps focus on multi-million-dollar contracts, IMCI can do well to service those six-figure deals. Actually, with billions of dollars in play, that's an optimum strategy.
Designing Cybersecurity For The Masses
Moreover, providing small to medium sized companies with designed-to-order cyber defense systems is right in IMCI's operations wheelhouse. In fact, unlike many big-name competitors that target multi-million dollar contracts almost exclusively, IMCI is more positioned as a provider to the masses. In other words, they have set themselves to take advantage of the millions of businesses that need and want the same quality cybersecurity systems as others. Inking deals with a few thousand clients certainly would deliver serious revenue milestones. And because IMCI understands that the best cybersecurity tool is a combination of computer code and understanding the human mind, their appeal to those masses of companies may generate a significant spike in business this year. That's indeed the plan.
Keep in mind, IMCI is banking on the fact that cybersecurity is more than implementing innovative technology; it's about people. After all, businesses are run by people, threat actors are people, and IMCI customers are people. So in that respect, cybersecurity isn't a technology business; it's a people business. And understanding people and how they act is the difference between designing a one-size-fits-all platform and a company-specific tool that protects businesses from bad actors and devastating cyber attacks. IMCI creates the latter.
Infinite Group doesn't hide their intentions, either. They actually say they don't sell products; they solve problems. And that's accomplished through a better approach to business whereby IMCI takes on the complexity of cyber defense while creating an architecture and road map that makes sense for a unique business. Remember that not all security is created to protect from outside threats. Insider threat is just as serious, and in many cases, companies don't consider the exposure left when not addressing that potential. Considering that financial, medical, retail, legal, power, and manufacturing are all "people-run" businesses, that concern should top their security wish-list. Infinite Brands makes sure it does.
Moreover, they leverage an expert workforce spanning across the United States to make sure its solutions have an impact. Not only that, its business model is inclusionary, working with organizations on all levels of Information Security and Cybersecurity, utilizing its award-winning Nodeware® SaaS to provide best-in-class cybersecurity functionality. It's one of the few that continuously scans networks to identify critical vulnerabilities and is a staple in accelerating IMCI's already impressive growth by securing client data, systems, and technologies. Put simply, Nodeware® positions IMCI to stay a leader in the cybersecurity sector. Even better, case studies show why its expected to hold its position for the long term, with data highlighting client-specific security integration that maintain IMCI's status as a respected and reliable provider in the multi-billion dollar space.
Of course, with IMCI attracting attention and inking deals, investors should do well, too. And at current levels, the stock is more than an attractive proposition; it's a compelling one.
Compelling Value Opportunity
The stock has traded higher over the past 52-weeks, so for those holding at higher prices, the best consideration is to hang tight. That's because with IMCI being better positioned than at any time in history, 52-week highs should be in their crosshairs. That's more than a wishful bullish assumption; it's a projection based on IMCI doing the right things at the right time. Analysts are equally bullish, with one at Goldman SCR expecting IMCI stock to pierce its 52-week high and score prices closer to $0.65, representing a 261% potential upside from its current price.
Indeed, several factors justify the bullish thesis. The biggest is that IMCI's strengths are precisely what the cybersecurity markets need. And they play into a sentiment where cyber vulnerabilities rank as the top concern for companies, including small businesses, which was noted in a Allianz Risk Barometer update. That report exposes the primary factor behind the IMCI investment proposition; being that IMCI's opportunities don't need to compete against the sectors biggest players.
Instead, they can, and are, tapping into demand from a market where Accenture's Cost of Cybercrime Study showed that 43% of cyber attacks target small businesses, and that's despite only 14% of those attacks directly targeting them. Still, deliberate or not, what is exposed is that the revenue-generating opportunity for IMCI is substantial, and the deployment of its SaaS-based Nodeware® platform could be the perfect tool to fend off attacks. Sales from that platform will ramp in 2022 and, by 2023, is expected to be a considerable value driver for the company. There's still more to like.
Transformational Acquisition
Infinite Group is finalizing its acquisition of Pratum, Inc., a transformative deal that will add revenues, profit, and a significant client book. That deal is expected to close this quarter and bring more than $4 million in annual revenues and add complementary services and products to enhance IMCI's product offerings. Further, if ambitions stay on course, Pratum is likely the first of several accretive roll-ups planned for 2022 and 2023. Since Pratum adds immediate capital firepower, the closing could spark additional acquisition interests and capability to further fortify the IMCI asset and operations portfolio. Even better, a share price rally.
Deservedly so. Peer valuations in the industry score price/revenue multiples at 10.2X. Using forecasted 2022 sales and an estimated $11 million run-rate post-acquisition, as well as a lenient discount multiple compared to peers, justifying a $0.65 price target is more than reasonable. In fact, it could be extremely conservative, especially after factoring in IMCI's planned NASDAQ uplist, cross-selling opportunities, and the potential for additional M&A activity. Suggestions of a valuation closer to one-dollar have been in the conversation. Thus, expect IMCI's imminent 10-K filing, and its commentary, to be closely viewed and listened to. Solid numbers and bullish guidance from management may be enough to ignite a near term and sustainable rally.
By the way, IMCI is sending its own bullish messages. They have appreciably strengthened its sales and managerial team, with many believing the increased personnel are needed to support a surge in business in 2022.
Earning A more Appropriate Valuation
That optimism is warranted. And remember, IMCI management can see behind the curtain, which should also excite current and potential investors. In-play is the revenue-generating power from deploying cutting-edge Nodeware®, its SaaS-based vulnerability management platform targeting small and medium-sized enterprises.
Great for clients is great for IMCI, since it inherently delivers more profitable SaaS-based solutions from company to client. Moreover, management commentary post the pending Pratum acquisition can help investors understand that a milestone acquisition can quickly become a 2022 catalyst. And since its new assets favorably complement IMCI's overall business and open the door for considerable cross-sale opportunities, revenue projections noted earlier could miss the mark by a substantial amount.
In other words, they can be appreciably higher. That would explain the recent company-wide team buildup. At the very least, hiring is a bullish indicator and is typically done ahead of growth, not after. That's where seeing behind the curtain has its advantages. And with jobs posted on its website, including management positions, the inference is that better times are ahead.
Setup For A Potentially Massive Finish To 2022
Thus, investment consideration in IMCI is indeed timely. And trading ahead of expected excellent news , especially upon delivery, tends to provide more bang for the investment buck. Indeed, at about $0.18 per share, there is considerable upside in play by just valuing current operations. Factoring in post-acquisition revenues and milestones that can turn into catalysts, IMCI, at these levels, is a share price simply too good to ignore.
But that's not the whole story. Good now, great later. Mid-year results are expected to be better than good; they could be transformational to the company. And with a pending acquisition, new hires, plans to move from the OTCQB to a more senior NASDAQ market, and positive revenue growth, a significant operating tailwind could fuel reaching other milestones sooner than later.
So, here's the bottom line: IMCI is serving up an attractive investment proposition on multiple levels. Moreover, while 2021 was an impressive year, 2022 can be transformational. And with the stocks 50% move higher since March 15th, investors are starting to take notice of just how powerful IMCI can become to a sector needing all hands on deck. Still, with a plan to score a new set of milestones, which generally turn into catalysts, recent gains may be a precursor of significantly better things to come. If so, investors in IMCI are at the right place at the right time.
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