After a turbulent 2020, it looks like Boston Omaha Corporation (NASDAQ: BOMN) has found some serious traction. Over the past three months, the stock has risen by 68% to its highest level since 2018. However, there are certainly some big catalysts that have contributed to this move, and there are also some reasons to believe there could be plenty of upside ahead if certain things go well for Boston Omaha in the next year or two.
With that in mind, here's a look at some of the latest developments that have pushed Boston Omaha's stock higher, what investors should keep an eye on in 2021, and whether the stock is still worth buying even after the gains.
What has driven such a sharp upward move?
There are certainly some good reasons Boston Omaha has performed so well lately.
The initial catalyst was the positive COVID-19 vaccine data that started to emerge in November. This could have implications for several areas of Boston Omaha's business, specifically in billboard advertising, its largest business segment. During the pandemic, many companies have pumped the brakes on outdoor advertising spend as fewer Americans are out and about.
In late October, Boston Omaha launched a special-purpose acquisition company, or SPAC, called Yellowstone Acquisition (NYSE: YSAC). As I've written before, this could end up being a huge growth driver if it's successful.
Boston Omaha recently acquired Utah Broadband, expanding the rural broadband side of the business. This is a high-potential business, and as the company builds scale, the profit potential should grow accordingly.
Last, but certainly not least, one of Boston Omaha's minority investments, Dream Finders Homes (NYSE: DFH), went public recently at an IPO price of $13 per share. As I write this, Dream Finders trades for about $22.50. Since Boston Omaha owned about 4.68 million shares before the IPO and had agreed to buy another 2,385,000 shares at the IPO price, the company is sitting on unrealized gains of more than $67 million just a week after the homebuilder went public.
Things to watch
The biggest potential game-changer right now is Yellowstone. If Boston Omaha's SPAC can find a high-potential acquisition target at an attractive valuation, it could catapult the stock's price higher.
It's also worth watching Dream Finders, as it has gone from being a relatively small piece of the pie to an investment valued at about $160 million -- nearly one-fourth of Boston Omaha's market capitalization. So, it's fair to assume the performance of Dream Finders could have a big influence on Boston Omaha's share price.
Finally, when the company reports its fourth-quarter earnings in a few weeks, I'll be watching to see how the company's stock portfolio has recovered, as well as how revenue from its core business lines (billboards, insurance, and rural broadband) is performing.
The Millionacres bottom line
The key takeaways are that Boston Omaha's stock has certainly performed well, but there have been some very good reasons for the outperformance. And if things continue to go well with the company's investment strategy (especially if the Yellowstone SPAC is successful), there could be plenty of upside ahead.
As a final thought, it's important to point out that with a market cap of less than $800 million and ambitions of growing into a large conglomerate, Boston Omaha is still a rather small company. It is often compared to an early-stage Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), and it is less than 0.2% of Berkshire's size, even after the recent move.