Park City Group, Inc.: Is This $6 Tech Stock the Next Multibagger Opportunity?

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The last time I told Profit Confidential readers explicitly about a multibagger opportunity, it shot up by 1,780% afterward.

Obviously, there are plenty of ways to make money in the stock market. But if it’s multibaggers you’re after, there’s actually a way to identify potential candidates, and the method can be summed up in one sentence: Find under-the-radar companies that are growing rapidly.

Just to clarify, a multibagger is an investment that returns more than 100%.

The company I’m looking at right now is Park City Group, Inc. (NASDAQ:PCYG), which I’m sure isn’t a familiar name to most people.

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Upon closer look, though, you’ll see that this company should get a lot more investor attention.

Headquartered in Murray, UT, Park City Group, Inc. is the parent company of ReposiTrak, which has a business-to-business (B2B) platform that allows retailers, wholesalers, and their suppliers to increase sales, control risk, and improve supply-chain efficiencies.

The platform has three suites:

  • MarketPlace, which helps retailers discover and vet suppliers
  • Supply Chain, which helps businesses “sell more, stock less, and see everything”
  • Compliance, which automates the compliance management process and reduces regulatory risk

(Source: “Investor Presentation,” Park City Group, Inc., last accessed June 7, 2021.)

Park City Group stock isn’t a big-name stock, but its platform is scaled and proven. To give you an idea, there are more than 340,000 supplier/retailer connections across the company’s applications.

Moreover, Park City Group has a huge blue-chip customer base, including household names like Walmart Inc (NYSE:WMT), Target Corporation (NYSE:TGT), CVS Health Corp (NYSE:CVS), and Costco Wholesale Corporation (NASDAQ:COST).

Park City Group, Inc. (NASDAQ:PCYG) Stock Chart

Chart courtesy of StockCharts.com

Looking at the above chart, we see that PCYG stock has had a rather choppy ride over the past two years. Recently, though, Park City Group stock seems to have gained some upward momentum after its earnings report was released on May 17.

The report showed that, in the third quarter of Park City Group’s fiscal year 2021, which ended March 31, the company generated $6.0 million of revenue. That represents a 30% increase year-over-year. (Source: “Park City Group Reports 30% Increase in Revenue, Net Income Increases 184% for Fiscal Third Quarter 2021,” Park City Group, Inc., May 17, 2021.)

In particular, Park City Group’s recurring software-as-a-service (SaaS) revenue from compliance, supply chain, out-of-stock, and other software solutions rose by 13% year-over-year to $4.5 million.

At the bottom line, the company earned net income of $773,000 in the March quarter, up by 184% from the $272,000 earned in the year-ago period.

Park City Group also boasts a well-capitalized balance sheet. As of March 31, the company had $23.2 million in cash and cash equivalents—and no debt.

Furthermore, Park City Group, Inc. is free-cash-flow-positive. The company has generated positive free cash flow in its past five fiscal years, as well as in the first three quarters of its current fiscal year.

And here’s perhaps the most exciting part about PCYG stock right now: private equity firms are looking at it.

When asked in May about the potential of selling the company to a private equity firm, Park City Group’s chairman and chief executive, officer Randy Fields, said, “…we’ve had a number of inquiries from interested parties in the last few months. We have an obligation to examine those all seriously.” (Source: “Park City Group, Inc. (PCYG) CEO Randy Fields on Q3 2021 Results – Earnings Call Transcript,” Seeking Alpha, May 17, 2021.)

He also said, “We think the stock is attractive. That’s why we’re expanding our buyback. So it’s probably not terribly surprising that others are finding us attractive at the moment. So I don’t have any news per se. But yes, I think it’s fair to say we’ve attracted a reasonable amount of interest at this stage.”

Analyst Take

Ultimately, a private equity sale of Park City Group, Inc., is just a possibility at the moment. If there’s going to be a transaction, management will make a regulatory disclosure. However, the fact that this fast-growing, under-the-radar tech company is getting interest from private equity firms should be considered a sign of strength.

Going forward, I wouldn’t be surprised to see Park City Group stock make another big move to the upside.