Are investors underestimating the value of a company’s diversification via:
- Geography of business
- Number of products and services
- Number of suppliers
- Number of buyers
- Varying durations of projects and the timing of their pay-offs.*
*More projects and shorter term means more diversification but that can also lead to more cyclicality. Perhaps best combination therefore, is with many small single contracts (as long as overhead is not too expensive), long term but with differing end or renewal dates which reduces cyclicality.