Sons...this is totally my belief!!!
1.BRVO is a long term hold. There is no doubt about it, however I think it is tradeable too depending on the objectives of one's portfolio.
2. I think its PPS will be between $5 - $10 from the end of this year to end of next year for the following reasons.
The beverage industry P/E mulitple is 20 and P/S multiple is 5. This is because the market is placing a lot of weight on profitability as the players are well established i.e the players revenue stream is mature! I think BRVO is in its infancy and as such the multiples should be reversed i.e P/S multiple should be 20 and P/E 5. This states that SAles are critical to profitabiliy and profitability is important! If this assumption holds truth then if the sales are 50M plus in 2006 then that equates to 50 cents per share (approx). When muliplied by the P/S of 20, the share price will be $10. On the other hand if market looks critically at profits then, P/E would be 20 and if the net income is assumed to be 10% of sales of 50M that would equate to 5 cents a share (5/100=.05 approx) and share price =.05 *20= $1.0!
But I do know that management expects to be on NASDAQ next year. NASDAQ rules states that the bid price should be $4 or more for 90 consecutive trading days which is about 5 months. So if the PPS reaches $4 in 4Q then they would be eligible to apply somewhere in the 3Q of 2006 ( that's why a R/S will not help becuz of the 90 day rule). So the inference is that the PPS will reach a $5 value by end of year.
Hence my inference is that PPS will $5 - $10.
However I will start exiting in a 'stepped up' manner. I will recoup my initial investment when it reaches $2.
PS. the exit plan is a function of the portfolio objectives.
Everybody should their own DD, not once but thrice and act accordingly! JMO
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