RCM Technologies: Unfairly Caught-Up In Market Sell-Off

Highlights

• RCM is a small staffing conglomerate with three segments - Engineering, Specialty Healthcare and IT.

• Recent market movements have pummeled their stock, but I believe their business is better insulated from recent movements than investors may realize.

• Catalysts include an impending arbitration settlement and debt pay-down, divestiture of a line of business, or a takeover offer from Management.

Brief Commentary

Before the Covid-19 pandemic, RCM Technologies was an interesting value investment with an activist chairman and a compelling case that their business segments were worth multiples of the market valuation. The pandemic caused their share price to plummet, further increasing the intrinsic value of the shares. Since publishing, management has taken several steps to close the valuation gap, including share repurchases, and the underlying business strength has caused the stock price to increase significantly.

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