omniQ Corp: Small AI Technology Stock Could Double or Triple

omniQ Stock Is an Under-the-Radar Opportunity

Finding technology stocks that trade at reasonable valuations is extremely difficult in today’s high-multiple stock market. Unearthing small technology stocks that trade at reasonable valuations is even more strenuous.

But I’ve found a tiny nano-cap technology stock trading at an attractive valuation.

omniQ Corp (NASDAQ:OMQS) has a market cap of a mere $75.0 million and a low share price, but the company is expected to grow its revenues by double-digit percentages.

At the core of omniQ Corp’s business is its proprietary artificial intelligence (AI)-based computerized and machine-vision image-processing solutions.

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omniQ stock recently moved from being traded over the counter to being listed on the Nasdaq. As a result, OMQS stock is now in the sightline of more investors.

Better yet, omniQ stock is down by 38% from its high in September, so I like the current risk/reward opportunity.

My Fundamental Bull Case for OMQS Stock

A look at omniQ Corp’s five-year revenue picture doesn’t exactly make you excited. It’s dull, but analysts estimate that things will improve.

Powered by some key acquisitions, omniQ is expected to ramp up its revenues by 51.4% to $83.6 million this year and by 33.9% to $111.9 million in 2022. (Source: “OMNIQ Corp. (OMQS),” Yahoo! Finance, last accessed October 28, 2021.)

This implies an attractive multiple for omniQ stock of 0.66 times the company’s 2022 revenue estimate.

Fiscal YearRevenues (Millions)Growth
2016$60.1N/A
2017$54.5-9.3%
2018$56.23.2%
2019$57.21.8%
2020$55.2-3.5%

(Source: “OMNIQ Corp.” MarketWatch, last accessed October 28, 2021.)

omniQ Corp produced positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2016 and 2017 before turning negative. But with the company’s strong revenue growth, its EBITDA could move back toward positivity this year.

Fiscal YearEBITDAGrowth
2016$603,030N/A
2017$884,45046.7%
2018-$1.2 Million-233.7%
2019-$617,00047.8%
2020-$6.6 Million-975.5%

(Source: Ibid.)

As far as earnings-per-share (EPS) go, omniQ Corp has been in the loss column based on both a generally accepted accounting principles (GAAP) and adjusted basis.

On an adjusted basis, omniQ Corp is expected to narrow its loss to $1.49 per diluted share this year, followed by potential profits of $0.68 per diluted share in 2022. (Source: Yahoo! Finance, op. cit.)

That would be impressive for a small company.

Fiscal YearGAAP Diluted EPSGrowth
2016-$8.0N/A
2017-$1.285.1%
2018-$2.18-82.3%
2019-$1.3737.5%
2020-$2.62-91.7%

(Source: Ibid.)

Surprisingly, omniQ Corp delivered positive free cash flow from 2016 to 2019 prior to moving to negative free cash flow in 2020.

Fiscal YearFree Cash FlowGrowth
2016$5.6 MillionN/A
2017$7.5 Million32.6%
2018$2.7 Million-64.3%
2019$4.2 Million57.9%
2020-$369,000-108.8%

(Source: MarketWatch, op. cit.)

Analyst Take

omniQ Corp’s valuation and projected business growth give me optimism that OMQS stock could return significant price appreciation. The fact that insiders have been net buyers of omniQ stock is a good sign.

If the company can deliver on its consensus 2023 EPS estimate, its forward price-to-earnings ratio would come in at an attractive 14.7 times.

Therefore, OMQS stock could double in price and still not look expensive.