Investment Review №356. A Reassessment of Values

AngioDynamics (ANGO) develops minimally invasive devices for vascular disease, oncology, and thrombosis. The investment thesis rests on a continued shift toward higher-margin technologies and rising procedure volumes. In Q1 FY2027, revenue grew 6.9% YoY to $80.9m, with the Med Tech segment reaching 49% of sales. The primary growth drivers are the Auryon laser system, with 21 consecutive quarters of double-digit growth, and the NanoKnife platform, which ablates tumors using electrical pulses. Broader reimbursement coverage adds upside. However, roughly 70% of the quarterly EBITDA beat came from a non-operating fee refund, and gross margin is expected to decline in the second half. The company is debt-free with $34m in cash. Principal risks include competitive intensity, reimbursement pace, management transition, and manufacturing relocation.

Rating: Buy | 12-Month Price Target: $17.

Global Industrial (GIC) is a North American distributor of industrial, warehouse, and business-support products. The investment case is underpinned by an industrial recovery, continued customer investment in warehousing and logistics, and growing higher-margin private-label brands (~40% of revenue). Seven distribution centers enable two-day delivery to 90% of customers. E-procurement is a key growth driver: digital channels account for over 60% of transactions, reinforcing loyalty. U.S. manufacturing reshoring adds a demand tailwind. Headwinds include modest sales growth and margin pressure from tariffs and transportation costs. Key risks include weaker customer spending, supply disruptions, internal-control deficiencies at subsidiary Indoff, and Leeds family voting control.

Rating: Hold | 12-Month Price Target: $39.

Once Upon a Farm (OFRM) produces organic baby and children's foods, including refrigerated purées and snacks. Upside stems from expanding retail placement, a broader product lineup, and improving profitability. Baby food is now 49% of sales, up from 42% in 2025, supported by branded refrigerated displays in baby-food aisles: over 4,100 installed by mid-2026, targeting 8,000 by 2027. New categories and retaining customers as their children grow add further upside. From 2027, operating leverage should help earnings outpace revenue growth. Key risks are underwhelming cooler ROI, higher retailer support/merchandising costs, intensifying competition, product-safety issues, and reliance on third-party manufacturers.

Rating: Buy | 12-Month Price Target: $24.50.

Unity Bancorp (UNTY) is a New Jersey–focused community bank serving small and mid-sized businesses. The investment case rests on sustained loan growth, robust profitability, and a solid capital base. In Q3 2026, the loan book grew 13% YoY to $2.78bn, and the quarterly dividend rose to $0.17. A key catalyst is legacy-loan repricing at higher rates in 2027. Additional positives include customer acquisition and a 32% QoQ decline in nonperforming loans. However, record earnings partly reflected a one-time tax benefit, and intensifying deposit competition limits margin expansion. Key risks are rising funding costs, commercial real estate concentration, and heavy reliance on interest income.

Rating: Buy | 12-Month Price Target: $72.