Case for $2+ share price by the end of 2021
Disclaimer. I own shares and these estimates and numbers are merely my opinion for debate. Do not invest based on me, do your own DD.
The case for a $170 million valuation or $2+ share by the end of 2021. It’s not that far fetched - and might even be the “base case”.
To get to that valuation, I’m targeting $5 million of 2022 annual operating profit or a 34 forward PE as of Dec 2021. For a high growth company like this - not far fetched - and heck traders have moved Micro cap valuations for FAR LESS.
They are fairly close to break-even at their cost structure today. In matter of fact they had an operating profit in Q3 2020 amidst a very difficult industry and world backdrop.
Ways they can achieve $5 million OI in 2021
- DISSIM world wide revenue reaches $10-15 million and at 20% op. margins that’s $3M right there. They are retailing the lighter at $45, made in China, 5% royalties - sales and distribution structure mostly in place, these are not crazy figures. They also have a lot of new product introductions and product line extensions in the works - colors, dual wind proof, etc. check YouTube, the views on some of these videos and the comments shows significant product acceptance.
- CBD Goldline and CBD brands can grow $3 million in revenue during 2021 at 33% operating leverage and add close to $1M operating profit.
- Flagship Honeystick line of vaporizers can add $2M at 25% leverage or $0.5M.
- Krave E-Cig and Nic gummies add another $2M sales and 25 % leverage for another $0.5M The nicotine gummies could have MM upside.
That’s $5 million OI right there and gets us to a $2 valuation. But wait, sure, there is risk above, but likely opportunity as well. What’s not even considered yet in the valuation though....
- Legal lawsuits could end up netting $0.5M or annual profit it royalties. This could be as high as 5M+ payments as well. They could see the auto draw patent.
- VPR Verified - they have signed distribution agreements
- vertical more directly into marijuana could happen
- the other brands not mentioned above - See website for details.
Key additional and non-financial reasons this growth is attainable:
- Kevin gets paid by increasing the share price. He owns 15-20% OS shares. He takes a modest CEO salary <$250K when you factor in the interest he’s earning off loaning the company money from time to time at 24%.
- They should become cash flow positive quickly with DISSIM and core growth.
- Management has done this all before taking Krave branded E-Cig public.
- Management has a history of signing national distribution and supplier agreements.
- Company hasn’t yet even scratched the surface on becoming more vertically integrated
- Company can easily do a product line extension into Marijuana and capitalize on the industry growth
I’m holding... if I’m half wrong it’s $1. All I know is that today’s valuation of $6 million is grossly misguided. Kevin, has done this all before, and with the recent acquisition of DIssim, the companies trajectory and future has never been brighter. Cheers to the run from $.02 to $2.
