H2O Innovation Inc. is a Canadian company that develops complex solutions for water purification based on membrane filtration technology. The company operates in three segments:
1) water technologies and services,
2) specialized products
3) operation and maintenance services.
The company offers membrane filtration technologies for end users of municipal, industrial, energy and natural resources; after-sales service as well as digital solutions for monitoring and optimizing waste water treatment plants.
H2O is a small-cap company, $ 207 million, employing 700 people. It has been traded on the stock exchange since 2007 and is also traded in the US under the ticker HEOFF.

For 3 years out of last 4 years the company has been at a loss, free cash flow was negative only in 2018. At the same time, revenue increased by 44%. 87% of H2O’s revenue is permanent and this is the first good sign we note.
30% of the revenue comes from the Spanish company Genesys Membrane that H2O bought in 2017, after which the revenue began to skyrocket. However, SPO was made for this.

Multipliers:
P / E current 66.8
P / S 1.44
EV / EBITDA 17.35
Debt $ 27 million with current operating cash flow of $ 7 million
Stock Price: $ 2.44

And now the second important moment: the structure of sales. H2O receives money literally from all continents, sells its services and technologies to China, USA, UK, Spain, Saudi Arabia. That is, potentially, any country, they just need to bring chemicals and cleaning equipment and deploy it on the spot. So their sales model can be scaled as much as necessary. If there is a crisis in one part of the world, the revenue will come from others.

As for finance, FCF has not gone into the negative zone since the summer of 2019, but the profit appeared only following the results of the first quarter of 2021. Simply Wall Street predicts 34% revenue growth (58% in the industry and 12% in the Canadian market). EPS came out of the negative zone and there are no forecasts of getting into it again.

The shares are trading below their 20, 50 and 200 daily averages, though they are all around 2.48-2.50. The company has small trading volumes (hundreds of thousands of dollars every day), so it sometimes varies from side to side. For example, today it has grown by 5.6%. The next peak is at 2.63 and then it goes to $ 2.8.

Conclusion: there are dozens, if not hundreds, of such small companies that can have a good future in North America. But this company has undeniable advantages in the form of constant revenue, a scalable business model, and the water treatment industry itself is stable and growing. While there is a feeling that the company is taking reasonable steps towards growth, and when they develop their business, the price will be completely different.