$MINE Excerpts from: April 12, 2016 Minerco Inc Company Analysis
MINE - $0.0297)
Price Target: $0.35
Rating: Speculative Buy
New Products Launch & Distribution Strategy to Drive Major Growth
by Rob Goldman
rob@goldmanresearch.com
COMPANY SNAPSHOT
INVESTMENT HIGHLIGHTS
Minerco, Inc. is an emerging growth company specializing in the food and beverage industry . Its portfolio includes Athena Brands, Inc., The Herbal Collection™ and Coffee Boost™. Athena Brands, Inc. is a specialty beverage company that develops, produces, markets and distributes a diversified collection of forward-thinking, good-for-you, enhanced and healthful consumer brands. The Athena Brands portfolio includes Avanzar Sales & Distribution, LLC, VitaminFIZZ®, Kids 50 - Yo Gabba Gabba!®, and Island Style™.
With a new targeted strategy of offering tasty, good-for-you beverages to consumers through sales to national accounts (such as retailers), the company could generate revenue at an annual run-rate of $10M next year. That excludes the meaningful revenue generated by its majority-owned west coast distributor .
A $30 million valuation is in the cards. While Minerco is currently an acquirer, M&A activity in the space is hot and it is not uncommon for beverage firms to be sold for 3x-5x revenue, once the $10M in sales mark is reached. Even sub-$10M in sales publicly traded peers trade over 2x sales. Our target price of $0.35 reflects a 3x $10M beverage sales figure. We rate these shares Speculative Buy .
Unique Positioning
We believe that Minerco’s multi-pronged, yet integrated strategy that includes the reformulation, re-branding, and re-launch of key and new products following a brief dormant period is primed to produce major dividends, beginning in the second half of 2016.
The recent acquisition (license) of the popular and healthy juice alternative Kids 50 - Yo Gabba Gabba!®, appears set to emerge as a second major product line in an entirely different category for sale via the same channels as VitaminFIZZ® and could also lead to new licensing opportunities in the highly desirable kids’ beverage segment.
Separately, the 75%-owned Avanzar Sales and Distribution not only is a meaningful revenue generator of primarily 3rd party products, but serves as a testbed and sales channel for Athena Brands’ products and a potential finder of both future acquisition and licensing deals. . Avanzar distributes products to some of the most trusted retailers in the United States, including Kroger (NYSE – KR), Albertsons, HEB, Golub (Price Chopper), Whole Foods (NASDAQ – WFM), Walgreens (NASDAQ – WBA), 7-Eleven, Tesoro (NYSE – TSO), Circle K, Chevron (NYSE – CVX), Kmart, Gelson's and Winco.
The Seminal Moment in Company History
Following generation of $2.45 million in revenue in fiscal 2015, sales during the six months ended January 31, 2016, were $516,534, all of which was generated from sales from the Avanzar distribution business, with essentially no contribution from Athena Brands product sales . On the surface, this intentional dormancy has been viewed by some investors as a negative. In our view, not only was this quiet period a positive, it could prove to be a seminal moment in company history.
Judging from filings, shareholder letters and press releases, it is clear that in the second half of 2015 there was a difference of opinion regarding the direction and business model related to the complete acquisition of VitaminFIZZ® (along with its distribution and products) which led to conflict and a de-emphasis on branded products until the situation was recently resolved. With the pending re-launch of the VitaminFIZZ® series, along with Kids 50 - Yo Gabba Gabba!®, we believe that the new offerings and management’s improved strategy of selling to and through multiple national accounts (such as supermarkets, major retail, etc.) will generate millions in revenue to Minerco.
There is a great deal of precedent in the beverage industry when internal disagreements (old strategy vs. new strategy) proved to be wrong and outdated, resulting in big mistakes. (The penultimate example is the sale of Starbucks (NASDAQ – SBUX) in 1988 from the Peet’s Coffee guys to a group led by Howard Schultz for $3.8 million, and the aborted “New Coke.” Ouch.) We are confident in the successful execution of the Company’s revised approach, just implemented in recent months, largely because it dovetails with the new industry trends, as outlined above.
Looking Ahead
Given the timing of the licensing and new product events, we believe that meaningful shipments will occur sometime during the second half of this calendar year. With that in mind, management noted in a recent filing that it targets revenue of $5M in fiscal 2017 (beginning in August 2016) . With the re-launch of the flagship offerings and the launch of new products, we believe that the revenue figure could be considerably higher as national accounts i.e., Walmart (NYSE – WMT), Kroger, etc. begin to take delivery of new products in 2016 - 2017.
Considering one national account could account for $1-2 million in annual twelve-month sales per product line, the $5 million objective for branded beverage sales could prove conservative. In fact, we believe that a $10M annual beverage revenue-run rate could be achieved sometime next year, which could assume a $30M or $0.35 valuation for Minerco. After all, a 3x-5x price-to-revenue multiple in buyouts is not uncommon in the current environment whereby larger firms are actively seeking to add specialty, hybrid drinks to their portfolios. Moreover, even on the low end, sub-$10M in sales peers such as True Drinks Holdings, Inc. (OTC – TRUU) trade at multiples north of 2x revenue. In our view, Minerco, Inc. (OTC – MINE) offers investors a unique opportunity to invest in a company whose shares were treading water while management pressed the “pause button” only to recently press “play” in conjunction with the execution of key business development events that could transform the company and substantially increase its value.
INDUSTRY OVERVIEW
Figure 1: BMC Industry Statistics
Source: http://www.CSPNet.com
As one would expect, mega-multinationals Coca-Cola (NYSE – KO), PepsiCo (NYSE – PEP) and other key brand names dominate the sales of the non-alcoholic beverage market, one of the largest in the world. In 2014, the top ten brands accounted for $30.9 billion gallons, or 43% of the U.S. liquid beverage refreshment market, according to the Beverage Marketing Corporation (BMC). (http://www.cspnet.com/category-news/beverages/articles/us-beverage-market-grows-22). The bottled water market, one of the segments in which VitaminFIZZ® plays along with the popular carbonated water vertical, grew by over 7% from 2013 to 2014 which is high for the overall industry. Conversely, the overall space grew by 2.2% for the period.
The secular trends evident in 2014 are even more present in 2016. These include the consumer migration away from sugar-centric and high caloric beverages and toward zero calorie more nutritious alternatives. Ready to drink beverages, drinks with perceived health benefits, companies believed to be operated via socially conscious directives, along with sports drinks, and those with caffeine remain extremely popular selections, according to BMC and the SDR Ventures investment bank. Furthermore, SDR Ventures sees considerable M&A activity and at relatively high valuations for smaller firms offering specialty drinks that represent some of the trends and characteristics above. (http://sdrventures.com/wp-content/uploads/2016/01/SDR-2015-Q4-Food-Beverage-Report-FINAL.pdf). In fact, SDR Ventures , notes that there were 49 beverage company M&A transactions in the fourth quarter of 2015 alone!
Licensing characters, names, titles, etc. for use in the sale of varying products can be a big contributor to food and beverage sales. The key is to acquire licensing rights to brands that have a timeless brand and characters, even if the underlying licensed brand itself may not appear timely, as meaningful value can be extracted via sales of the right product to the appropriate target market and consumer.Riding the coattails of this concept, Minerco has the opportunity to generate major traction with the recent Kids 50 - Yo Gabba Gabba! deal.
THE KEY BRANDS
Minerco’s Athena Brands boasts a new product category, a new licensing deal for a product in the all-important children’s beverage market , and a new, soon-to-be-launched CBD-based beverage.
CB Tea's
The market test and initial sales will take place in Southern California through the Company’s majority-owned distributor, Avanzar Sales and Distribution.
VALUATION AND CONCLUSION
We believe that Minerco’s multi-pronged, yet integrated strategy that includes the reformulation, re-branding, and re-launch of key and new products following a brief dormant period is primed to produce major dividends, beginning in the second half of 2016.
Given the timing of the recent licensing and new product events, we believe that meaningful shipments will occur sometime during the second half of this calendar year. With the re-launch of the flagship offerings and the launch of new products, we believe that the revenue figure could be considerably higher as national accounts i.e., major retailers, etc. begin to take delivery of new products in 2016 - 2017.
Considering one national account could account for $1-2 million in annual twelve-month sales per product line, we believe that a $10M annual revenue-run rate could be achieved sometime next year, which could assume a $30M or $0.35 valuation for Minerco. After all, a 3x-5x price-to-revenue multiple in buyouts is not uncommon in the current environment whereby larger firms are actively seeking to add specialty, hybrid drinks to their portfolios. Moreover, even on the low end, sub-$10M in sales peers such as True Drinks Holdings, Inc. (OTC – TRUU) trade at multiples north of 2x revenue. In our view, Minerco, Inc. (OTC – MINE) offers investors a unique opportunity to invest in a company whose shares were treading water while management pressed the “pause button” only to recently press “play” in conjunction with the execution of key business development events that could transform the company and substantially increase its value. Therefore, we rate these shares Speculative Buy with a $0.35 target price.
http://www.goldmanresearch.com/201604121116/O...-mine.html
MINE - $0.0297)
Price Target: $0.35
Rating: Speculative Buy
New Products Launch & Distribution Strategy to Drive Major Growth
by Rob Goldman
rob@goldmanresearch.com
COMPANY SNAPSHOT
INVESTMENT HIGHLIGHTS
Minerco, Inc. is an emerging growth company specializing in the food and beverage industry . Its portfolio includes Athena Brands, Inc., The Herbal Collection™ and Coffee Boost™. Athena Brands, Inc. is a specialty beverage company that develops, produces, markets and distributes a diversified collection of forward-thinking, good-for-you, enhanced and healthful consumer brands. The Athena Brands portfolio includes Avanzar Sales & Distribution, LLC, VitaminFIZZ®, Kids 50 - Yo Gabba Gabba!®, and Island Style™.
With a new targeted strategy of offering tasty, good-for-you beverages to consumers through sales to national accounts (such as retailers), the company could generate revenue at an annual run-rate of $10M next year. That excludes the meaningful revenue generated by its majority-owned west coast distributor .
A $30 million valuation is in the cards. While Minerco is currently an acquirer, M&A activity in the space is hot and it is not uncommon for beverage firms to be sold for 3x-5x revenue, once the $10M in sales mark is reached. Even sub-$10M in sales publicly traded peers trade over 2x sales. Our target price of $0.35 reflects a 3x $10M beverage sales figure. We rate these shares Speculative Buy .
Unique Positioning
We believe that Minerco’s multi-pronged, yet integrated strategy that includes the reformulation, re-branding, and re-launch of key and new products following a brief dormant period is primed to produce major dividends, beginning in the second half of 2016.
The recent acquisition (license) of the popular and healthy juice alternative Kids 50 - Yo Gabba Gabba!®, appears set to emerge as a second major product line in an entirely different category for sale via the same channels as VitaminFIZZ® and could also lead to new licensing opportunities in the highly desirable kids’ beverage segment.
Separately, the 75%-owned Avanzar Sales and Distribution not only is a meaningful revenue generator of primarily 3rd party products, but serves as a testbed and sales channel for Athena Brands’ products and a potential finder of both future acquisition and licensing deals. . Avanzar distributes products to some of the most trusted retailers in the United States, including Kroger (NYSE – KR), Albertsons, HEB, Golub (Price Chopper), Whole Foods (NASDAQ – WFM), Walgreens (NASDAQ – WBA), 7-Eleven, Tesoro (NYSE – TSO), Circle K, Chevron (NYSE – CVX), Kmart, Gelson's and Winco.
The Seminal Moment in Company History
Following generation of $2.45 million in revenue in fiscal 2015, sales during the six months ended January 31, 2016, were $516,534, all of which was generated from sales from the Avanzar distribution business, with essentially no contribution from Athena Brands product sales . On the surface, this intentional dormancy has been viewed by some investors as a negative. In our view, not only was this quiet period a positive, it could prove to be a seminal moment in company history.
Judging from filings, shareholder letters and press releases, it is clear that in the second half of 2015 there was a difference of opinion regarding the direction and business model related to the complete acquisition of VitaminFIZZ® (along with its distribution and products) which led to conflict and a de-emphasis on branded products until the situation was recently resolved. With the pending re-launch of the VitaminFIZZ® series, along with Kids 50 - Yo Gabba Gabba!®, we believe that the new offerings and management’s improved strategy of selling to and through multiple national accounts (such as supermarkets, major retail, etc.) will generate millions in revenue to Minerco.
There is a great deal of precedent in the beverage industry when internal disagreements (old strategy vs. new strategy) proved to be wrong and outdated, resulting in big mistakes. (The penultimate example is the sale of Starbucks (NASDAQ – SBUX) in 1988 from the Peet’s Coffee guys to a group led by Howard Schultz for $3.8 million, and the aborted “New Coke.” Ouch.) We are confident in the successful execution of the Company’s revised approach, just implemented in recent months, largely because it dovetails with the new industry trends, as outlined above.
Looking Ahead
Given the timing of the licensing and new product events, we believe that meaningful shipments will occur sometime during the second half of this calendar year. With that in mind, management noted in a recent filing that it targets revenue of $5M in fiscal 2017 (beginning in August 2016) . With the re-launch of the flagship offerings and the launch of new products, we believe that the revenue figure could be considerably higher as national accounts i.e., Walmart (NYSE – WMT), Kroger, etc. begin to take delivery of new products in 2016 - 2017.
Considering one national account could account for $1-2 million in annual twelve-month sales per product line, the $5 million objective for branded beverage sales could prove conservative. In fact, we believe that a $10M annual beverage revenue-run rate could be achieved sometime next year, which could assume a $30M or $0.35 valuation for Minerco. After all, a 3x-5x price-to-revenue multiple in buyouts is not uncommon in the current environment whereby larger firms are actively seeking to add specialty, hybrid drinks to their portfolios. Moreover, even on the low end, sub-$10M in sales peers such as True Drinks Holdings, Inc. (OTC – TRUU) trade at multiples north of 2x revenue. In our view, Minerco, Inc. (OTC – MINE) offers investors a unique opportunity to invest in a company whose shares were treading water while management pressed the “pause button” only to recently press “play” in conjunction with the execution of key business development events that could transform the company and substantially increase its value.
Quote:Therefore, we rate these shares Speculative Buy with a $0.35 target price.
INDUSTRY OVERVIEW
Figure 1: BMC Industry Statistics
Source: http://www.CSPNet.com
As one would expect, mega-multinationals Coca-Cola (NYSE – KO), PepsiCo (NYSE – PEP) and other key brand names dominate the sales of the non-alcoholic beverage market, one of the largest in the world. In 2014, the top ten brands accounted for $30.9 billion gallons, or 43% of the U.S. liquid beverage refreshment market, according to the Beverage Marketing Corporation (BMC). (http://www.cspnet.com/category-news/beverages/articles/us-beverage-market-grows-22). The bottled water market, one of the segments in which VitaminFIZZ® plays along with the popular carbonated water vertical, grew by over 7% from 2013 to 2014 which is high for the overall industry. Conversely, the overall space grew by 2.2% for the period.
The secular trends evident in 2014 are even more present in 2016. These include the consumer migration away from sugar-centric and high caloric beverages and toward zero calorie more nutritious alternatives. Ready to drink beverages, drinks with perceived health benefits, companies believed to be operated via socially conscious directives, along with sports drinks, and those with caffeine remain extremely popular selections, according to BMC and the SDR Ventures investment bank. Furthermore, SDR Ventures sees considerable M&A activity and at relatively high valuations for smaller firms offering specialty drinks that represent some of the trends and characteristics above. (http://sdrventures.com/wp-content/uploads/2016/01/SDR-2015-Q4-Food-Beverage-Report-FINAL.pdf). In fact, SDR Ventures , notes that there were 49 beverage company M&A transactions in the fourth quarter of 2015 alone!
Quote:MEET THE TEAM
SDR Ventures is distinguished by the transactional and operational experience of its principals and directors. With over a century spent in the trenches as both business owners and strategic consultants, the SDR team brings deep knowledge and business acumen.
http://sdrventures.com/meet-the-team/
Licensing characters, names, titles, etc. for use in the sale of varying products can be a big contributor to food and beverage sales. The key is to acquire licensing rights to brands that have a timeless brand and characters, even if the underlying licensed brand itself may not appear timely, as meaningful value can be extracted via sales of the right product to the appropriate target market and consumer.Riding the coattails of this concept, Minerco has the opportunity to generate major traction with the recent Kids 50 - Yo Gabba Gabba! deal.
THE KEY BRANDS
Minerco’s Athena Brands boasts a new product category, a new licensing deal for a product in the all-important children’s beverage market , and a new, soon-to-be-launched CBD-based beverage.
CB Tea's
The market test and initial sales will take place in Southern California through the Company’s majority-owned distributor, Avanzar Sales and Distribution.
VALUATION AND CONCLUSION
We believe that Minerco’s multi-pronged, yet integrated strategy that includes the reformulation, re-branding, and re-launch of key and new products following a brief dormant period is primed to produce major dividends, beginning in the second half of 2016.
Given the timing of the recent licensing and new product events, we believe that meaningful shipments will occur sometime during the second half of this calendar year. With the re-launch of the flagship offerings and the launch of new products, we believe that the revenue figure could be considerably higher as national accounts i.e., major retailers, etc. begin to take delivery of new products in 2016 - 2017.
Considering one national account could account for $1-2 million in annual twelve-month sales per product line, we believe that a $10M annual revenue-run rate could be achieved sometime next year, which could assume a $30M or $0.35 valuation for Minerco. After all, a 3x-5x price-to-revenue multiple in buyouts is not uncommon in the current environment whereby larger firms are actively seeking to add specialty, hybrid drinks to their portfolios. Moreover, even on the low end, sub-$10M in sales peers such as True Drinks Holdings, Inc. (OTC – TRUU) trade at multiples north of 2x revenue. In our view, Minerco, Inc. (OTC – MINE) offers investors a unique opportunity to invest in a company whose shares were treading water while management pressed the “pause button” only to recently press “play” in conjunction with the execution of key business development events that could transform the company and substantially increase its value. Therefore, we rate these shares Speculative Buy with a $0.35 target price.
http://www.goldmanresearch.com/201604121116/O...-mine.html
Minerco, Inc. (MINE) Stock Research Links
MINE amazing beverage company going to big boads. buying in 0.02-0.03 range. looking for $1.00
EFFI NEW MMJ Company. Started buying 0.0025. Looking for 0.05 plus
TXHD Amazing SMS text marketing company with low float, strong management, BMA securities onboard for move to Nasdaq down the road. Long term buy and hold.
Disclaimer My investment selections are based on my own intense and extensive due diligence of the companies, their management and the business plan. Do your own due diligence before investing in any securities.
My favorite paid chat plays are at Penny Stock Lounge http://www.pennystocklounge.com/ Worth the 7 day free trial. I am member and make big money on their chart plays. Very much worth checking out.
I am not a promoter of investments. I am an investor, period! I do enjoy squeezing short sellers when the opportunity arises which is fairly often considering Small cap Nasdaq stocks and OTC stocks are shorted by brokerage houses in the US and internationally. I prefer Big Board stocks over Penny stocks! Everyone should study Deepcapture.com and watch the online movie http://www.deepcapturethemovie.com before investing in any stocks on any exchange so they understand how the markets really work and prepare themselves. In microcap stocks I like to trade around a core position and that philosophy has served me very well over the last two decades. The majority of my money is invested in big board stocks. I only speculate with 5% of my portfolio in non listed OTC plays, mainly in the Marijuana sector.
“Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt.”
― Sun Tzu, The Art of War
EFFI NEW MMJ Company. Started buying 0.0025. Looking for 0.05 plus
TXHD Amazing SMS text marketing company with low float, strong management, BMA securities onboard for move to Nasdaq down the road. Long term buy and hold.
Disclaimer My investment selections are based on my own intense and extensive due diligence of the companies, their management and the business plan. Do your own due diligence before investing in any securities.
My favorite paid chat plays are at Penny Stock Lounge http://www.pennystocklounge.com/ Worth the 7 day free trial. I am member and make big money on their chart plays. Very much worth checking out.
I am not a promoter of investments. I am an investor, period! I do enjoy squeezing short sellers when the opportunity arises which is fairly often considering Small cap Nasdaq stocks and OTC stocks are shorted by brokerage houses in the US and internationally. I prefer Big Board stocks over Penny stocks! Everyone should study Deepcapture.com and watch the online movie http://www.deepcapturethemovie.com before investing in any stocks on any exchange so they understand how the markets really work and prepare themselves. In microcap stocks I like to trade around a core position and that philosophy has served me very well over the last two decades. The majority of my money is invested in big board stocks. I only speculate with 5% of my portfolio in non listed OTC plays, mainly in the Marijuana sector.
“Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt.”
― Sun Tzu, The Art of War
