Potential Catalyst To Drive Long-term Financial Results
During the second quarter, GrowLife reported revenues that increased 460% to $872,000 and year-to-date sales that soared to over $1.6 million. The company later announced that the Department of Justice’s September 2013 announcement led to record sales and transactional volume day on its Greners.com portal. Over the coming years, the firm plans to expand its retail locations to generate some $8 million in revenues this year and $15 million next year.
With a market capitalization of just $30 million, these revenues could send the stock sharply higher over the coming years, particularly as management moves the firm to breakeven. Many tobacco companies trade at a 2.5x to 4.0x price-sales ratio, which would equate to a $37.5 to $60 million market capitalization next year, or a 25% to 100% move higher in share price. And, these figures may be undervaluing the stock given its triple-digit growth rates.
The addition of Cannabis.org to the company’s coffers could dramatically enhance these revenues over the long-term. While the impact is difficult to quantify pre-launch, investors can view the move as just one of many catalysts that could drive shareholder value higher.
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