Big Cap Portfolio + Small Cap Portfolio: 2 New Buys - April 10, 2024

A buying opportunity on a quality stock

I havent’t bought a stock for months in my big cap portfolio but an opportunity seems to appear. I will remain cautious and only buy half a position considering the seasonality and the potential consolidation to come.

My portfolio is just here for the visibility on the whole portfolios (small and big)

My small cap investment method

Let’s begin with the small cap. Just to clarify here is my method for now.

I won’t buy small cap stocks the same way I buy big caps. They are more volatile, unpredictable and less followed by analysts and investors.

Therefore, I will follow these rules:

• My positions will be very small. This will allow me to

  • Limit the risk for each stock

  • Easily reinforce if the stock price falls - and my investment thesis remains the same

  • To get my foot in the door and then reinforce or exit

• I won’t focus too much on the price even if, of course, I don’t want to unreasonably overpay

• Of course, I continue to keep my investment philosophy: great quality companies that will be able to thrive over the long term.

And now, it is time to discover the companies and why I bought them.

First new stock

The first stocks is RVRC a Swedish company. RevolutionRace (RVRC) is a Swedish outdoor apparel brand known for its innovative designs, sustainable practices, and commitment to providing high-quality clothing for outdoor enthusiasts.

My position: 68 shares (around 400€)

Main metrics

Market cap $700M (all metrics will be in USD)

Revenue 24 $177M

Revenue future growth 19.6% in 2024 / 16.8% in 2025

Net profit margin 17.4%

TTM average ROE / ROIC: 25.9% / 25.2%

PE24 22.8x / PE25 18.6x

Dividend 2.04% / Payout ratio 46%

Cash $35M (0.7x EBITDA)

Buybacks: 0%/year

Why invest in this company?

• Strong dynamism

• High quality products

• Fully digital native brand - so scalable business model

• Decent margin for the sector - and expected to increase. As a comparison, same net profit margin than LVMH

• Free cash flow positive so able to finance its growth

My fair price estimation is around 71SEK, the stock price appears to be reasonable considering the qualities and growth

If needed, a support is between 40 and 45SEK.

And now, it is time to see the second second - the first big cap in months!