Robert McWhirter of Selective Asset Management has a good tip on a Venture Exchange tech name that’s probably new to most investors: Gatekeeper Systems (Gatekeeper Systems Stock Quote, Chart, News TSXV:GSI), an $18-million market cap company that has plenty of potential for growth in the video security space.
“It’s a relatively small market cap company but it’s got great opportunity and significant recurring revenue,” said McWhirter, president of Selective Asset Management, who spoke to BNN Bloomberg on Friday.
“They reported their earnings in the last two weeks and I’m meeting with management in the coming week as it is an under-covered company. To my knowledge, there are no analysts in the Morningstar database that are covering the company and that’s a shame because it’s a great opportunity,” he added.
Abbotsford, BC-based Gatekeeper reported its fiscal first quarter financials on January 23, showing record revenue of $3.4 million, up from $1.8 million a year earlier and gross profit of $1.5 million, up 61 per cent year-over-year.
During the quarter, Gatekeeper secured two contracts totalling $18 million with the Southeastern Pennsylvania Transportation Authority (SEPTA) for installation and ongoing maintenance of digital video recorders on its vehicle fleet, a major coup for the company, said McWhirter, as it bodes well for future contracts with transit authorities across the US.
“In Philadelphia they were facing $40 million in slip-and-fall or collision lawsuits and now that they have this variety of cameras installed overall in a fleet of approximately 3,000 vehicles and they’re moving towards updating them to high-definition with Gatekeeper, as well, the actual amount of lawsuits has dramatically plummeted, so the payback on buying a small amount of expenditure for the Gatekeeper solution versus the saving in lawsuits has been huge,” he said.
“And other transit authorities in the United States are also looking longingly at that success and saying, ‘Gee, we should be getting some as well.’ So, overall we think it’s a good opportunity,” he said.
“It’s a very illiquid stock so don’t rush out to buy $100,000-worth in a hurry,” McWhirter cautioned.
“The stock has pulled back in spite of really strong earnings in their most recent period —they’ve had record results in their most recent two quarters, and we think that there’s still strong outlook for them in quarters going ahead as other jurisdictions take on the technology and benefit from it.”
On the company’s year ahead, CEO and president Doug Dyment said in the Q1 press release that 2020 is already shaping up to be another pivotal year of growth for Gatekeeper.
“The company performed well in all strategic initiatives during the quarter. We also announced the largest contracts in the Company’s history which total over $18 Million.
These two contracts not only represent significant growth for us in 2020 but also represent recurring revenue for up to five years from one of the largest transit agencies in North America. It is very exciting for Gatekeeper to experience this growth and our employees are motivated to develop and launch new solutions for our customers across our various markets,” said Dyment.
GSI started the 2019 at $0.095 per share and ended at $0.225 per share, while so far the stock is now even for 2020.