$LMB (-0.47%) is also promising in the infrastructure sector.

Limbach Holdings: The silent profiteer from infrastructure and building technology

Limbach Holdings (NASDAQ:LMB) is much less well known, although its business model is very understandable. The company plans, installs and maintains technical building systems, i.e. precisely the infrastructure that is essential in hospitals, industrial plants, data centers and other complex buildings.

The operating performance is particularly exciting here. The EBIT margin currently stands at 8.0%, following an average of just 5.2% in the previous five years. ROIC has risen to 17.0%, compared to a five-year average of 12.4%. The company is therefore not only operating more profitably today, but is also deploying capital more efficiently than before.

In addition, the growth story remains intact. Analysts expect EBIT growth of 17.8% per year over three years, while the sales forecast CAGR is 9.2%. Turnover is expected to rise from 646.8 million to 738.3 million dollars and then to 787.1 million dollars. EPS is expected to rise from 3.37 to 4.94 dollars.

Particularly important for a stock like this: the balance sheet looks manageable. Net debt to EBITDA is 0.60, liquidity is good and the Altman Z-score of 7.1 signals solid financial stability. Analysts even see the greatest potential in the field here: up 46% to 116.60 dollars

I had a little browse through my Investing. There was a screening there.

The focus of this screen was on dynamics rather than absolute values. High margins are nice, but are often already priced in. More exciting are companies whose profitability still has room for improvement - and are making use of this room.

The most important criteria:

• Small-cap size (approx. USD 300 million to USD 10 billion market capitalization)
• EBIT margin ≥ 5%, with positive EBIT margin momentum over three years at the same time
• Average EBIT margin of the last five years below 10% to exclude maturity phases
• ROIC currently ≥ 8%, with positive ROIC CAGR
• ROIC above the cost of capital (WACC)
• EBIT forecast CAGR ≥ 12% and sales forecast CAGR ≥ 8%
• At least 20% analyst potential

$LMB (-0.47%) From project business to scalable platform

Limbach Holdings (NASDAQ:LMB) is a good example of how a previously fragmented service model can be professionalized step by step. The company is active in the building technology sector - a market that has long been characterized by low margins.

This is precisely where Limbach has made a start in recent years. The EBIT margin currently stands at 8%, after a five-year average of less than 5%. The momentum is remarkable: the EBIT margin grew at a CAGR of around 40% over three years, while ROIC climbed to 16%. This means that the company earns significantly more than its capital costs.

The outlook for the future also remains constructive. Analysts are forecasting EBIT growth of just under 20% per year, while sales are expected to grow at a CAGR of around 16%. Despite this development, the share is trading well below its 52-week high; analysts see potential upside of around 47%.

Limbach is not a high-flyer, but a typical "improver": less spectacular, but increasingly efficient.

$MOD (-4.77%) : Industrial know-how meets structural tailwind

Modine Manufacturing (NYSE:MOD) has repositioned itself in recent years. A traditional industrial company has increasingly become a provider of thermal management solutions - an area that is benefiting from data centers, electrification and efficiency requirements.

The figures reflect this change. The EBIT margin is now 11.6%, more than double the long-term average. The margin development is no coincidence: the EBIT margin grew at a CAGR of over 38% over three years, while ROIC is at 15.6% and continues to rise.

The outlook is particularly interesting. Analysts expect EBIT growth of over 24% per year and sales growth of around 17% CAGR. At the same time, the WACC is a good 10%, below the return on capital employed.

The market has already partially rewarded this development, but analysts still see upside potential of over 32%. Modine is therefore a classic case of structural change that is not yet fully reflected in the share price.

$$CVLT (-1.83%) : Software small cap with a new focus on efficiency

CommVault Systems (NASDAQ:CVLT) operates at the interface between industry and software. The company offers data management and backup solutions for hybrid IT infrastructures - a market with high inertia and stable customer relationships.

For a long time, CommVault was profitable but not very dynamic. The picture is beginning to change. The EBIT margin is currently 8.2%, well above the historical average. Even more important is the development of the return on investment: ROIC is 11%, with a ROIC CAGR of over 36% in the last three years.

The outlook is unusually strong for a software stock of this size. Analysts expect EBIT growth of over 48% per year, with solid sales momentum. Despite these forecasts, the share is trading well below previous valuation levels, with analyst potential of just under 50%.

$CVLT (-1.83%) is not a momentum play. It is an example of how operational discipline and efficient use of capital can generate new fantasy in a mature market.

Perhaps this will be of interest to some of you.