What is FITX worth, really?
I am posting this one last time for Mother's Day (thanks to kbad for trying to make me more rational).
Several days ago I posted a valuation (copied from privateequityguru) which posited the pps based on different scenarios. While I think that model is still valid, I have began to wonder about its limitations. (To be honest, pps on the pennies can baffling because they don’t seem to follow the same rules as my other stocks - i.e. good news comes out, stock jumps.) I began to wonder where this stock should be, or better yet could be. (Please feel free to add to this list of queries.)
What should a stock be worth that has the “largest and most advanced” legal marijuana production facility in the world, a “$20 million facility will churn out pot like other factories churn out aspirin?” A company where $5 BILLION in sales is just a start, and the demand will only grow in the coming years, and may never decline? (Think about that $5 billion in sales within a year or two!) If trends continue, legally and socially, $25 billion in sales will be reached in 7 - 10 years with the addition of new facilities (my estimate).
What is a company worth that is at the forefront of all the aspects of a breakout industry about to take North America by storm? An industry that will produce more wealth than the tobacco industry did, once the medical and recreational laws settle out (my hypothesis).
What is a company worth that appoints the best talent it can attract in all the major areas of (its) business? What if that company goes out if its way to avoid the legal pitfalls of it competitors? What if that company had no real competitors? What if that company is led by a team with the vision to do the right things, the right way? (Remember Warren Buffet says to buy a stock based on management more than anything else.)
The commodity of marijuana is going to be so lucrative that it will create billionaires by the tens, and millionaires by the thousands (sounds crazy, right). I think it will need to be put on an exchange or have one created for it. Producers that do it right will reap the rewards and FITX is set up for just that.
Who is FITX's competitor as a producer? I know they exist, but I don't see them as being as efficient and well run. FITX's technology and factory style production should make TWEED's facility look backward in comparison.
I cannot even begin to guess what will come from the hemp and medical research/pharmaceutical side of this company.
So...
The below projection goes right out the window. I guess that if everything falls in place even close to what is expected/planned, if just half of it happens add a zero to the pps/earnings numbers below. Let’s also remember that pps is driven by emotion, and what people believe the future potential is. Yep, multiply by 10. (Give it 4 - 7 years.)
(copied from privateequityguru)
If FITX produces just 100,000 pounds of MJ in it's first full year....less than 1/10 (one tenth) of the 1.3 million pounds.....at a sales price of just $2,500 per pound...the total revenue will be $250,000,000 (two hundred and fifty million dollars)....at a 60-70% profit margin, that will be a profit of $150,000,000 to $200,000,000 (one hundred and fifty million dollars to two hundred million dollars).
But assuming the 60% holds true as we ramp up, FITX total authorized share count of 3,500,000,000.....the earnings ($150,000,000 divided by 3,500,000,000) per share would be $0.043 (four point three cents) per share. Then, with a modest P/E (price / earnings) ratio of:
PE PPS
25 $1.07 (25 P/E times $0.043 earnings per share).
30 $1.29 (30 P/E times $0.043 earnings per share).
35 $1.50 (35 P/E times $0.043 earnings per share).
40 $1.72 (40 P/E times $0.043 earnings per share).
45 $1.93 (45 P/E times $0.043 earnings per share).
50 $2.15 (50 P/E times $0.043 earnings per share).
55 $2.36 (55 P/E times $0.043 earnings per share).
60 $2.58 (60 P/E times $0.043 earnings per share).
That is at 10% of the proposed production, without a share repurchase, without adding in HEMP Tech or the supplemental products....
I am posting this one last time for Mother's Day (thanks to kbad for trying to make me more rational).
Several days ago I posted a valuation (copied from privateequityguru) which posited the pps based on different scenarios. While I think that model is still valid, I have began to wonder about its limitations. (To be honest, pps on the pennies can baffling because they don’t seem to follow the same rules as my other stocks - i.e. good news comes out, stock jumps.) I began to wonder where this stock should be, or better yet could be. (Please feel free to add to this list of queries.)
What should a stock be worth that has the “largest and most advanced” legal marijuana production facility in the world, a “$20 million facility will churn out pot like other factories churn out aspirin?” A company where $5 BILLION in sales is just a start, and the demand will only grow in the coming years, and may never decline? (Think about that $5 billion in sales within a year or two!) If trends continue, legally and socially, $25 billion in sales will be reached in 7 - 10 years with the addition of new facilities (my estimate).
What is a company worth that is at the forefront of all the aspects of a breakout industry about to take North America by storm? An industry that will produce more wealth than the tobacco industry did, once the medical and recreational laws settle out (my hypothesis).
What is a company worth that appoints the best talent it can attract in all the major areas of (its) business? What if that company goes out if its way to avoid the legal pitfalls of it competitors? What if that company had no real competitors? What if that company is led by a team with the vision to do the right things, the right way? (Remember Warren Buffet says to buy a stock based on management more than anything else.)
The commodity of marijuana is going to be so lucrative that it will create billionaires by the tens, and millionaires by the thousands (sounds crazy, right). I think it will need to be put on an exchange or have one created for it. Producers that do it right will reap the rewards and FITX is set up for just that.
Who is FITX's competitor as a producer? I know they exist, but I don't see them as being as efficient and well run. FITX's technology and factory style production should make TWEED's facility look backward in comparison.
I cannot even begin to guess what will come from the hemp and medical research/pharmaceutical side of this company.
So...
The below projection goes right out the window. I guess that if everything falls in place even close to what is expected/planned, if just half of it happens add a zero to the pps/earnings numbers below. Let’s also remember that pps is driven by emotion, and what people believe the future potential is. Yep, multiply by 10. (Give it 4 - 7 years.)
(copied from privateequityguru)
If FITX produces just 100,000 pounds of MJ in it's first full year....less than 1/10 (one tenth) of the 1.3 million pounds.....at a sales price of just $2,500 per pound...the total revenue will be $250,000,000 (two hundred and fifty million dollars)....at a 60-70% profit margin, that will be a profit of $150,000,000 to $200,000,000 (one hundred and fifty million dollars to two hundred million dollars).
But assuming the 60% holds true as we ramp up, FITX total authorized share count of 3,500,000,000.....the earnings ($150,000,000 divided by 3,500,000,000) per share would be $0.043 (four point three cents) per share. Then, with a modest P/E (price / earnings) ratio of:
PE PPS
25 $1.07 (25 P/E times $0.043 earnings per share).
30 $1.29 (30 P/E times $0.043 earnings per share).
35 $1.50 (35 P/E times $0.043 earnings per share).
40 $1.72 (40 P/E times $0.043 earnings per share).
45 $1.93 (45 P/E times $0.043 earnings per share).
50 $2.15 (50 P/E times $0.043 earnings per share).
55 $2.36 (55 P/E times $0.043 earnings per share).
60 $2.58 (60 P/E times $0.043 earnings per share).
That is at 10% of the proposed production, without a share repurchase, without adding in HEMP Tech or the supplemental products....
