Well it looks like $18 is the new $20, and while I prefer the $20 side of things, I am OK with things stabilizing here before the next move higher!
Every time we get new analyst coverage(RBC) and every time our stock price target is increased, we get a new wave of owners who are in at a higher cost level leading to greater support and a firmer foundation underpinning the stock price!
RBC is a very conservative house and I would expect us reaching full capacity sooner than 4 years....2 to 2 and 1/2 or possibly even earlier???
On top of this, at full capacity our margins will be increased and Tustin will have greater flexibility on Contract manufacturing pricing.....which means they will charge their customers more which will lead to even greater margins, and the top end most likely will bump to $300 million or even slightly more than their current capacity listed at $270 million. Nick seems to under talk and over perform!
And of course this brings us to all to the additional cash he has at his disposal......is he out shopping for more space to lease and equipment to buy or is he looking for an even smaller manufacturer to swallow or perhaps a merger of equals??
Now that RBC is onboard, how long before we get coverage from Morgan Stanley? It seems we are really starting to enter the big leagues!
In the midst of all of this, there are a lot of sharks swimming around with bloated wallets looking for a take out candidate....a company with an excellent track record, high margins, on an extreme growth path with demand outstripping supply for their products??? Hmmm
Yes a bit of a longshot here, but certainly in the mix!
As for share price, I expect us to mill around here until the middle of April perhaps and then we may begin to see a little more volume and things starting to firm up again.
The market seems to be going back and forth between risk on and risk off.....Or between Old growth stability and high growth potential. Lucky we seem to fit nicely into both categories!
So I think we can just sit back now and watch things roll out as the plan is executed!
