Apollo Healthcare Corp Warrants (03/01/2022) APHWF

RE:RE:RE:RE:RE:RE:RE:Weak Hands

[deleuze68]

There are actually severe barriers of entry. Big box stores are only willing to deal with suppliers that are reliable and can guarantee uninterupted supply of product. Apollo has developed relationships over decades with these stores and proved that they could meet their demand. How many manufacturing facilities in Canada have their own rail spur? This is the premier facility in Canada and possibly North America for private label products. Sales have increased twofold during the pandemic not just because of increased demand, but most importantly because the big box stores during the pandemic preferred to deal with a supplier that was most likely to meet this demand. These expanded relationships are not going to disappear. The pandemic has not provided a temporary boost for Apollo, but rather fueled future growth by solidifying their moat.

I'm not suggesting earnings will remain at these elevated levels into the future but they really don't need to in order for Apollo to be considered dirt cheap. Even if earnings are cut in half (from $1.40 annualized to $0.70 annualized) as a private label consumer staples company it should still command a P/E of at least 15 which would put the share price at $10.50, more than a double from here.