Cautious12 wrote: Everyday I repost a variation of the discussion on where I think this company's share price is going and why. I post this summary hoping to get feedback or, at the very least, help new or potential investors in VP appreciate why the share price has rallied to its current value so aggressively and why. I hope the regulars on this board don't find it too annoying.
TL;DR: this stock is going up! BUY now!
Why?
In 2014 this company was trading over 60c. Since 2014, they have had loads of management issues, CEOs that wouldn't settle for a lower salary, and debt issues. Since 2014 they have got their shyt together and 2016 was a banner year for restructuring Vodis, getting debt off the books, recapitalizing, bringing the two founders back as CEO and board member.
VP's current market cap is around $30M. The closest MMPR stage 5 comparable is BE with a market cap of $60M. Of course, BE and VP are different companies, but the status of an MMPR application tends to dominate the valuation. There is loads of room for VP to increase in value just based on that comparable alone.
We know that they have $1.3M in the bank from their November PP. They will undoubtedly use that capital to expand their production capacity to use the remaining 45% of their tier 2 license. That capital will not generate revenue for a while, but the market is already pricing in this growth.
In the short term we expect VP to report that the phase 2 expansion has been approved by WA state and clones are planted. A grow cycle is roughly 3 months when the revenue from the expansion can be realized.
We expect dramatically increased revenue around the 2nd quarter of 2017 and updates on the status of the phase 3 expansion (the remaining 45% of the tier 2 license). By this point, I would expect VP to have a valuation that is approximately the same as BE's current valuation.
By the end of 2017 we will have 9 or 10 months of phase 2 revenue. Phase 3 will be done and a few months of full tier 2 revenue realized. I think by the end of 2017 65c-70c would be totally realistic even if the MJ bull market goes away.
A (conservative) 70c target is based the following assumptions - all of which can dramatically increase the share price further:
a) no tier 3 expansion in Washington. A tier 3 production license would expand production to 30,000 sqft and would triple potential revenue!
b) no inspection at the Delta, BC facility. Remember that this facility is fully built and sitting idle. Any announcement of an inspection will add roughly 30M to the company's value (roughly 30c per share). A $1 / share price would not be unrealistic when the Delta, BC facility is operational.
c) no California expansion plans. They have enough capital to skip phase 3 (fund phase 3 with phase 2 cash flow) and use the PP capital to expand into California.
Thoughts?
Disclaimer: I am a professional trader and have been trading for nearly 35 years for small family hedge funds. I am long VP and SL.