My Bet on VPOR
One of the most volatile sectors of 2014 thus far has been the Green Sector, made up of publicly traded companies who are taking positions to profit from the decriminalization of marijuana. As there are only a few US States adopting this right now, any company who gets into the action now has a significant first-mover advantage. This is especially true as the commercial aspect of this industry gains momentum and states start to see tangible benefits such as skyrocketing tax revenues, less impacted prisons and lower healthcare costs. Much like the gold rush, those who have potential to profit the most will be a degree or two away from the precious resource, whether its gold or marijuana. Those who sold the picks, shovels, clothing, etc. made far greater profits than the average gold miner. I see those who are making improvements on the technology and efficiency of the use of the resource as the ones who stand to benefit the most. I am bullish on this industry.
There are roughly 45 companies traded on the Medical Marijuana Index (MMJ Index) at this time, and most are OTC due to their nascent nature and low share price/market cap/etc. The fact is people do not know how to valuate these companies yet, and the stock values are heavily based on trends. As time goes on, those who demonstrate strong financial performance will prevail, leaving the others in the dust and creating a new cohort of millionaires who took a calculated risk. It appears that this sector has reached a bottom and will begin its climb upward over the next few months. I do not expect it to surpass the highs of March this year, but it will certainly correct. Now is a good time to get into this sector, in my opinion.
At this time, my bet is on a little company called The Vapor Group (VPOR). They market and sell a portfolio of brands of Vapor pens, e-juices, wax/herb/oil vaporizers and other technology that is truly making a splash with consumers. Their stock came about through a reverse merger with SPLI, and the stock symbol was approved by FINRA to be changed to VPOR in late April. Many MMJ companies' shares are temporarily being halted due to sketchy financials or press-releases, but FINRA's review and blessing leads me to believe that we are safe from any halts at this point. Share value associated with this company has ranged from .04 to .45 in the last six months, and it is a strong bet that this company's value is somewhere in the middle. Let's say $0.25. They recently released Q1 financials that demonstrated nearly $1 million in revenues and a 60% gross profit margin. Fortunately, demand exceeded supply and they decided to finance additional inventory via debt, rather than dilution. The investment company who funded this has the option to convert their shares in October at $0.15. Assuming this investment company likes to make money, we can assume leadership feels this stock will be trading at a premium of that price at that time, potentially up to $0.20. As this is a new company, some other costs caused the quarter to be unprofitable. The CEO gave guidance that Q2 should be significantly better than Q1, and Q3 is where the real breakthrough will be. They will be opening a few brick & mortar locations in Florida an will continue to distribute their products through already-established retail channels, as well as online. I have purchased over $150 in product from this company and plan to order more e-juice soon for my vape pen. My bet is that this company becomes profitable this year and will bring in revenues of $8-10 million.
With current shares trading at below $0.10, I am bullish on VPOR and see this price climbing to $0.20 - $0.25 by the end of the year. I am long on this company and was not compensated to write this post. Just wanted to get my thoughts out there.
