PermaFix - Balancing the Present With the Future
Some thoughts on near-term weakness vs long-term strength
Last week was a busy week for some of my largest positions. I originally started this post planning to update our subscribers on not just PESI, but also INFU, IRIX, and XELB. However, as I started writing that post, I realized PESI deserves a standalone article. Moreover, it is only fair for INFU, IRIX, and XELB to not let their updates get lost in a longer PESI post. Consequently, I will plan to update you on these three names in a separate piece later this week.
Right now, let’s dive into PESI to cover what every PESI investor is talking about: balancing our thoughts on the stock given relative near-term weakness in the core business versus the massive upside potential in 2H24 and beyond.
PermaFix - Balancing the Present With the Future
PermaFix (PESI 0.00%↑) reported its 4Q23 results last Wednesday and actually surprised me a bit to the upside on those numbers. On the other hand, the guidance for 1H24 on the subsequent conference call was relatively weak. The company attributes this primarily to uncertainty related to government spending early in the year, which makes sense given concerns about a looming partial government shutdown. That said, the company certainly surprised to potentially massive upside with commentary regarding a new proprietary treatment method. Together with the Hanford vitrification plant remaining on schedule to commence treatment in early 2025, the stock responded positively to the earnings report and conference call.
Below, I will discuss the potential upside in PESI shares over the next few years and why I think it is not at all unreasonable that the stock *could* be a 10-bagger from here. To be clear, I am not predicting that will happen (at least not yet; we need to hear more details, which may come soon), but what I am highlighting is the fact that PESI now has enormous upside potential well beyond my expectations prior to last week’s conference call. Ultimately, I want to discuss how I am personally thinking about the stock and balancing the short-term, relative weakness in the business versus the long-term potential. As always, I share these thoughts not as investment advice, but simply as a way for us to collaborate on interesting opportunities.