Sack Lunch (SAKL) Represents a Compelling Value for Those Buying the Dip By Ryan Allway · Wednesday, July 20th, 2016 Sack Lunch Productions Inc. (OTC Pink: SAKL) has seen its shares fallen nearly 20% over the past month after its meteoric rise dating back to late last year. With the company’s fundamentals intact, the steep decline is most likely due to profit-taking from short-term traders. The move could represent a great opportunity for long-term investors to add to their position or new investors to initiate a position in the rapidly growing company. To syndicate this article, or for more information, please contact us online or call (406) 862-5400. For those new to the story, the company specializes in event entertainment that is popular among the Millennial generation. These events include Slide the City, Color Me Rad, The Lantern Fest, The Dirty Dash, and Trike Riot. In addition, the company holds a majority interest in Green Endeavors Inc. (OTC: GRNE) that operates Aveda-licensed salons and retail locations. In this article, we will take a look at the fundamental and technical characteristics that could make the company a compelling buy. Robust Fundamentals Sack Lunch Productions has grown its revenue from just under $5 million in FY 2014 to over $10.6 million in FY 2015. This year, the company anticipates generating about $17 million in revenue by launching events in new U.S. cities and around the world. Sack Lunch reported yesterday that the first six months of FY 2016, ending June 30, produced total sales of $10.015 million. While this figure represents sales and not finalized revenue numbers, the fact that the first half of this year nearly matches all of the previous year is a good indication of revenue growth. Further, the company’s new $5 million senior credit facility clears the path for organic growth with 136 corporate events, 35 international events, and 40 domestic franchised planned this year. Moving forward, the company has a unique opportunity to pursue roll-up acquisitions across the event entertainment industry. The bargain acquisition of Springbok last August doubled the company’s size and set the stage for its current growth projections. Additional acquisitions could similarly bolster the company’s size, improve profitability, and open up further distribution for its other events across the country and globe. The company’s modest $13.8 million market capitalization implies a price-sales multiple of just 1.3x, which is significantly lower than the industry’s 2.0-2.4x average, according to Morningstar data. If the company’s shares were to trade with a 2.0x ratio, it would translate to a $21.4 million market capitalization that’s nearly double its current valuation – and that would be on the low end of the industry average range. Technical Opportunity Sack Lunch Productions’ recent pullback has created an opportunity for investors, since the pullback was likely due to profit-taking from shorter term traders. Screen Shot 2016-07-20 at 3.05.06 PM Looking at the company’s stock chart, the pullback briefly touched lower trend line support at around $0.045 before rebounding back above the 200-day moving average at $0.071. The 200-day moving average forms a great support level, while the RSI appears neutral at 51.07 and the MACD experienced a bullish crossover. Investors might consider a smaller position in the stock at these levels and average in as the rebound gains traction. Looking Ahead Sack Lunch Productions stands at an interesting point in its recent history. With revenue on the rise, the company appears to be undervalued on a fundamental price-sales basis. The recent pullback has exacerbated that discount and created a potential opportunity for investors to average in at a low price. With technical indicators pointing toward oversold conditions, it may be a good time to consider adding shares. Over the coming quarters, the company also plans to complete an audit and become more fully compliant with regulators. These moves could open the door to a potential up-listing and encourage more institutional investors to become involved with the stock. In turn, this could reduce the high level of volatility and potentially bring shares closer to their fair value. For more information, visit the company’s website at www.sacklunchproductions.com. Share This Article:TweetFacebookLinkedInTumblrStumbleDiggDelicious CONTACT: 888-288-5215 · Please read our Full Disclaimer pertaining to this article.
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