Analyst loves this Canadian microcap stock

Beacon Securities analyst Russell Stanley maintained his “Buy” rating and $0.30 target price on Thermal Energy International (Thermal Energy International Stock Quote, Chart, News, Analysts, Financials TSXV:TMG) in a Dec. 17 report, citing growing evidence that repeat business is validating the company’s long-term growth thesis.

Earlier in the day, Thermal announced a $1.5-million order from the same multinational building materials company that awarded it an initial $1-million contract in July. The follow-on order, for a different site, includes the installation of four proprietary HeatSponge two-stage boiler economizers.

Stanley said that management believes this customer alone could present additional opportunities across six other U.S. facilities and several international sites.

The announcement followed a separate $3.2-million turnkey heat-recovery contract disclosed a day earlier from another repeat customer, a multinational frozen food producer with more than 40 manufacturing facilities globally. While customers were not named, Stanley said the pattern of repeat wins reinforces Thermal’s execution track record and underscores the scalability of its installed-base strategy.

“Repeat business not only demonstrates Thermal’s strong execution on prior work, but it also validates a central element of our thesis,” Stanley said. He added that roughly 60% of the company’s order flow over the past four years has come from its top 10 corporate customers, despite Thermal having penetrated only about 100 of an estimated 1,000 production sites operated by those clients globally.

“This implies considerable runway for growth within the existing customer base,” he said.

Stanley also pointed to improving backlog momentum. As previously disclosed, Thermal reported a late-October backlog of nearly $21-million, up 13% year over year, following close to $12-million in orders during its fiscal first quarter ended Aug. 31. With a May 31 fiscal year-end, the company is expected to report second-quarter results in January.

From a valuation perspective, Stanley said Thermal continues to trade at a steep discount to peers, changing hands at roughly 3.6 times his calendarized 2026 Adjusted EBITDA estimate. That compares with Trane Technologies, which trades near 18.7 times forward EBITDA despite materially lower expected growth.

Stanley expects Thermal to generate $4.9-million in Adjusted EBITDA on $38.2-million of revenue in fiscal 2026, improving to $7.8-million of Adjusted EBITDA on $47.7-million of revenue in fiscal 2027.

“With accelerating order momentum, a growing base of repeat customers and improving technical indicators, we continue to see a favourable risk-reward from current levels,” Stanley said.

-30-