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Flexible Solutions International: An Unknown Micro-Cap That Is Worth A Look

Flexible Solutions International Inc. ($FSI) is a micro-cap company that develops, manufactures, and sells products that conserves energy and water. The company was started with its first product being designed to conserve water for the swimming pool market, but management has expanded FSI's operations to also include commercial water conservation products. A full list of the company's products can be found on page two of its 2016 Annual Report (linked below).

FSI is a highly speculative investment but there are several reasons why I am interested in the company:

1) Balance Sheet Strength - The company has a current ratio of only 0.2 and sports a large net cash position (~$5MM in cash and ~$2MM in total debt).

2) Ownership - The company's directors own approximately 40% of the shares outstanding.

3) Promising Business Prospects - FSI has reported flat revenue growth over the last few years but the company's products are still selling. With projections of global water shortages in the out years, FSI is well-positioned for future growth.

This company, however, does not come without risks. First, FSI business is highly concentrated and three companies currently make up a significant portion of total sales. Secondly, this company has been facing tough competition in its industry and this will likely continue for the foreseeable future. If FSI's management team fails to innovate and provide differentiated products, an investment in this company will not do well.

Bottom Line

Of course, this is a very risky investment idea and investors should do their due diligence before purchasing FSI shares. However, I believe that this small company has a great market opportunity and could end up being a tremendous long-term investment at today's price. Follow me for additional insights on this company.

Author's Note: All images are from FSI's 2016 Annual Report (https://www.sec.gov/Archives/edgar/data/1069394/000165495417002917/fsi_10k.htm)

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