Today's Profile *SGMD* Is Seeing An Early Volume And Price Breakout
CTXR Receives Updated Analyst Report
If it isn't already, you need to turn your focus directly to SGMD this AM. Currently, a price and volume breakout could be signaling the beginning of a massive run today for this tiny sized stock.
Furthermore, last week's stock profile, CTXR, received one more important update to its Dawson James Securities analyst report. Give it a read here.
Now, I want you to focus in on your new breakout stock idea for today, 12/23:
*Sugarmade, Inc. (SGMD)*
Sugarmade, Inc. is a product and branding marketing company investing in operations and technologies with disruptive potential. The Company is becoming a leading supplier to the growing hemp industry and is benefiting from the growth of the hydroponic marketplace.
SGMD has been delivering awesome news over the past couple months that makes the company look like it's ready to take on the status of a major player in this booming industry. Check this out:
SGMD Catalyst No. 1 - Major Hemp Extraction News
Sugarmade Enters Hemp Extraction Equipment Supply Business – Initial Customer Order En Route to Mega Hemp Extraction Facility
NEW YORK, Dec. 20, 2019 (GLOBE NEWSWIRE) -- via NetworkWire – Sugarmade, Inc. (OTCQB:SGMD) (“Sugarmade”, “SGMD”, or the “Company”), a major supplier to the hydroponic cultivation and hemp sectors, today announces its entry into the marketplace for hemp extraction and laboratory equipment, one of the fastest-growing areas of the overall hemp industry. The Company additionally announces it has begun shipments of equipment to be installed in one of the largest planned facilities in the eastern portion of the United States.
“We are very pleased to announce we have accepted the initial components from the manufacturer and these components are now in shipping containers en route to Western Kentucky to be installed at what will likely be one of the largest extraction facilities in the eastern part of the United States,” commented CEO Jimmy Chan. “We will begin booking this revenue upon delivery and installation, which is expected to begin in January.”
The ordering corporate entity, East West BioPharma Group, Inc., is in the process of building a hemp extraction and laboratory facility designed to process up to 1,000 liters of hemp distillate per day. The equipment is designed to be ultra-efficient, while still being at the lower end of the cost model on a per liter of distillate extracted basis.
Sugarmade has entered into an agreement with manufacturers located throughout China that have significant experience in designing and manufacturing equipment used to extract essential oils from plants, terpenes, especially medicinal herbs and flowers. The experience in these specific extraction technologies, which has been gained over the decades, is now being brought to bear relative to the extraction of the oils from hemp. In collaboration with Sugarmade, these Chinese companies have increased the scale of the equipment to fit the larger crop sizes associated with hemp cultivation, while maintaining the high levels of efficiency for which these manufacturers have become known throughout Asia.
Sugarmade is entering this business as part of a major business expansion outlined in its recently approved strategic plan. The plan calls for the Company to continue to supply extraction and laboratory equipment into the hemp extraction sub-sector of the marketplace. Sugarmade believes it is especially capable of success in this business segment due to its extensive experience in Asian product sourcing, its strong relationships with manufacturers and its considerable expertise in international logistics.
Mr. Chan continued, “We have been working on this new business opportunity for a considerable number of months with our staff involved in numerous aspects of not only procurement, sourcing and logistics, but also the actual design of the component part of the systems. This has allowed Sugarmade to gain strong levels of experience in this sector, which we believe can be applied to other similar contracts. We are in the process of negotiating an additional similar deal for a second Kentucky extraction facility. We believe this new business will represent a meaningful component of our growth strategy.”
Sugarmade expects additional shipments for its initial Western Kentucky customer to continue through at least the second calendar quarter of 2020. The newly designed equipment was successfully laboratory tested at the factory in China and then disassembled and packaged in containers for transpacific shipment. The first shipment has left the Chinese location and is en route with delivery expected in Western Kentucky during January 2020. The second customer for Sugarmade referenced above has ordered a similar set of extraction and laboratory equipment with the Chinese factory engaged in the final assembly processes. Sugarmade plans to make additional information available concerning this possible secondary order upon final assembly and initial shipment.
SGMD Catalyst No. 2 - Acquisition Strategy
Sugarmade Targets Additional Acquisitions in Hydroponics Roll-Up Strategy
NEW YORK, Dec. 03, 2019 (GLOBE NEWSWIRE) -- via NetworkWire – Sugarmade, Inc. (OTCQB:SGMD) (“Sugarmade”, “SGMD”, or the “Company”), a major supplier to the hydroponic cultivation and hemp sectors, is excited to announce that the Company continues to pursue an aggressive M&A roll-up strategy as it positions Sugarmade as the dominant entity in the hydroponics marketplace. Specifically, the Company is currently in preliminary talks with six hydroponic and agricultural supply targets in the U.S. and central Europe.
Management notes that ideal targets should have an EBITDA margin of at least 8%. The Company prefers to pay a reasonable multiple to revenue, with 10% in cash and 90% in stock for potential acquisitions, with precise terms dependent on market conditions. Sugarmade closed on its acquisition of BZRTH Inc., a marketer and manufacturer of hydroponic growth supplies, on Oct. 30, 2019, for roughly 1x revenue, integrating an annualized $33Mn in revenues and an EBITDA margin of 5%, with revenues anticipated to continue to grow over coming quarters.
Sugarmade CEO, Jimmy Chan, noted, “We continue to position Sugarmade as a dominant entity in a market that promises aggressive growth as margins tighten for larger producers in the hemp and hemp-related space. The return on investment in this space is extremely appealing right now, and we believe that will continue to be the case as we pursue this strategy.”
In addition, the Company intends to revive its October 2018 Letter of Intent (“LOI”) to pursue the acquisition of Sky Unlimited (dba Athena United), a supplier of CB cultivation materials in the near term. Sugarmade plans to close the deal in Q1 2020. Sky Unlimited has annualized revenues of $33Mn to $35Mn and EBITDA margin of 11%.
Chan continued, “When we close the Sky Unlimited acquisition, we expect to have around $70Mn in annualized revenues.”
SGMD Catalyst No. 3 - Uplisting To NASDAQ
Sugarmade Issues Corporate Update on Uplisting to Nasdaq Exchange
NEW YORK, Nov. 26, 2019 (GLOBE NEWSWIRE) -- via NetworkWire – Sugarmade, Inc. (OTCQB:SGMD) (“Sugarmade”, “SGMD”, or the “Company”), a major supplier to the hydroponic cultivation and hemp sectors, is pleased to provide an update as the Company moves toward an uplisting of shares onto a major US exchange following news that Sugarmade’s direct competitor, GrowGeneration Corp. (NASDAQ:GRWG) (“GrowGen”), announced on Monday, Nov. 25, that its shares have been approved for listing on the Nasdaq Capital Market ("NASDAQ").
Following its acquisition of BZRTH, Inc. (“BZRTH”), and another acquisition to be announced in the near future, management believes that Sugarmade is very similar to GrowGen in terms of market segment, scale of operations, and financial performance metrics (on an overall, consolidated basis). As a result, the Company believes GrowGen’s move onto the Nasdaq is a very promising signal for Sugarmade as the Company prepares to uplist its own shares.
“The approval of GrowGen shares for the move up onto the Nasdaq market is a great sign for Sugarmade as we prepare to make a similar move,” commented Jimmy Chan, CEO of Sugarmade. “It’s a positive signal about the hydroponics market and about our overall strategy. It’s time for institutional investors to get heavily involved in the pick-and-shovel ancillary markets surrounding the hemp and hemp-related boom. GrowGen has done a great job, and we are hot on their tail right now, and plan to surpass them in the race to number one in the hydroponics space.”
The total market capitalization of the Nasdaq Exchange currently stands at $10Tn U.S. dollars, representing the second largest exchange in the world in terms of market capitalization for shares traded.
SGMD Catalyst #4 - BZRTH Acquisition
Sugarmade Releases H1 2019 Data for Recent Acquisition, BZRTH: Over $15Mn Sales on 25% Sequential Revenue Growth
NEW YORK, Nov. 12, 2019 (GLOBE NEWSWIRE) -- via NetworkWire – Sugarmade, Inc. (OTCQB:SGMD) (“Sugarmade”, “SGMD”, or the “Company”), a major supplier to the hydroponic cultivation and hemp sectors, is pleased to provide full financial performance data for its recent acquisition, BZRTH, LLC (“BZRTH”), a leading hydroponics ecommerce supplier. Data for the six months ended June 30, 2019, reveal net profitability on sales exceeding $15Mn, representing 25% revenue growth on a sequential six-month period basis.
Jimmy Chan, CEO of Sugarmade, commented, “We are very happy to present our shareholders and current and prospective investors with a quantitative overview of the financial performance we are integrating as we assimilate BZRTH into Sugarmade. If any doubts remained about the strategic merits of this transaction, hopefully they will be soundly put to bed by the top and bottom line performance we are revealing today.”
BZRTH Financial Data Highlights for the Six Months Ended June 30, 2019:
- Total Sales above $15Mn
- Gross Profit above $5Mn
- Sequential Decline in Cost of Goods Sold as a Percent of Total Sales
- Overall Sales growth of 25% Sequentially
- Net Profitability generating Net Income of $749K
Management notes that the powerful positive trends in both growth rate and operational efficiency, as well as the nominal scale of operations, define an extremely desirable trajectory as BZRTH assets are integrated into Sugarmade operations. The Company also believes that inherent synergies between the two companies will capture and improve upon BZRTH standalone trends in the quarters ahead.
“BZRTH fits into Sugarmade like a hand in a glove,” continued Mr. Chan. “We didn’t just buy ourselves $37Mn in forward sales. We bought ourselves a ton of synergy that will elevate the impact of everything we do. Moreover, this data represents a strong affirmation of our core strategic thesis: the center of gravity in terms of overall growth in the hemp and hemp-related boom has shifted from primary producers to ancillary industries that enable greater productive efficiency, with hydroponics sitting right at the heart of that dynamic. With this acquisition, Sugarmade has now assumed a central leadership position in that ascendant theme.”
The Company plans to release further BZRTH financial data for quarter ended September 30, 2019 along with projections for current quarter performance in the very near future.
About The Company: Sugarmade, Inc. (SGMD)
From the company website:
GROWTH THROUGH INNOVATION
Sugarmade, Inc. is headquartered in Monrovia, California, a suburb of Los Angeles, with additional warehouse locations in Southern California. Our Company is publically traded on the over the counter stock market with the trading symbol of SGMD. We are involved in several businesses ventures, which we outline below.
AGRICULTURAL & CULTIVATION SUPPLIES
We are also a supplier of products to the agricultural sector by way of several recently signed marketing, distribution and business arrangements.We are realizing very strong growth from this business sector, which we believe will continue for the foreseeable future. This is an exciting market sector with strong growth in a variety of areas. We plan to address many of these growth areas.
RESTAURANT SUPPLIES & PACKAGING PRODUCTS
One of our primary businesses is supplying generic and custom printed products to the quick service restaurant sub-sector of the restaurant industry, via our CarryOutSupplies(dot)com division. While this business unit already serves more than 2,000 quick service restaurants and garners an approximately 25% to 30% market share in frozen yogurt and ice-cream sector, we plan to continue to expand operations via the addition of market share and through the introduction of new product offerings.
Our main products include double poly paper cups for cold beverages; disposable clear plastic cold cups, paper coffee cups, yogurt cups, ice cream cups, cup lids, cup sleeves, food containers, soup containers, and plastic spoons, but we are always innovating through new customized options and new product types.
Here's Why SGMD Needs Your Immediate Attention
Even after Friday's volume and share price outburst, SGMD appears to still be trading at undervalued levels.
From its current price per share just over $.01, SGMD still has over 50% in upside potential to its $.022 October high.
A quick search will show you that Barchart(dot)com is reporting that its "TrendSpotter" composite indicator gives SGMD a "Buy" recommendation.
On top of that, the Barchart website is reporting that SGMD is displaying multiple technical indicators that are appearing bullish:
- Trading Over 5-Day Simple Moving Average "BUY"
- Trading Over 20-Day Simple Moving Average "BUY"
- 50 - 100 Day MACD Oscillator "BUY"
With Friday's news plus recent acquisitions and the potential NASDAQ uplisting, SGMD could start lighting up the charts. Get it on your radar now.