Service Stream Surpasses Even Our Expectations

Forager Funds largest Australian holding Service Stream (ASX:SSM) released its half year numbers after market close today. I've written about this stock a few times on Livewire and it keeps delivering for us and other shareholders. EBITDA of $15.8m was another half-on-half increase and it has been spewing out cash thanks to working capital improvements (this stock had a market cap of $60m a few years ago and has generated more than that in free cash flow in the past 12 months alone). With revenue growth baked in, management's forecast of a similar second half looks easily achievable. Taking them at face value and adjusting for 6c of distributions to be paid soon, the stock trades at just 9 times earnings despite doubling in the past 18 months. We'll meet with management over the next couple of days but everything seems to be progressing smoothly.

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Steve Johnson
Founder & Chief Investment Officer

Steve began Forager Funds in 2009, and now manages approximately $470m across two funds. Offering a listed Australian Shares Fund (FOR) and an unlisted International Shares Fund, Steve focuses on long-term investing in undervalued companies.

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