WATR Major Support Line, High Volume and RSI DivergenceFirstly, does WATR possess a high quality balance sheet and growth prospects on a fundamental level? YES!!
The company has $23m cash and $21m of borrowings, with FCF increasing from $6m in 22 to an estimated $7.4m in 23 and $9m in 24, owing to a reduction in CAPEX. The only thing I don't like about the balance sheet is the high amount of intangible assets, but, these aren't set to increase and a high proportion is goodwill from acquisitions which will be amortised over time.
Net margin remains high at 17.6% and is forecasted to be maintained at this level, with revenue growing from $71m in 22 to $90m in 25.
In terms of technical analysis, WATR is hovering around a strong support uptrend on the weekly chart, against a positive divergence on the RSI. In 2021 the PE ratio sat at over 50, with this now down to sub-20, indicating that in the past investors were willing to pay 150% more than today's price. The orange lines dictate my price targets, however, I would be inclined to hold this as an investment for much longer.
