Initial positionI like the prospects here - took an initial position - will add when I see confirmation in the next quarter report.
Pros:
-Highly succesful recent quarter with 50 % revenue growth and ebitda profitability
-valuation at just 2 times 2021 revenue (assuming 26 million cad next year or a 30 % growth rate) when subtracting the cash position
-products seem to be superior to 3M and fellows - gaining market share due to strong acknowledgement from the medical community
-New opportunity in middle east with the Hartman distribution agreement
-device partnership to launch product in 2023
-new powder product launched in the 4th quarter
-Off the radar - no danger of being overhyped
-Strong BOD - highly succesful entrepeneurs owning 55% of the stock
-Head of BOD bought 70k shares recently to add to his position at 2,20 til 2,65
Cons:
-potential dilution of 10 million shares once the stock goes north of 2,60 CAD as most of the options and warrants get in the money then
-CFO leaving without a sudden replacement leaves a bad taste
-hype of may 2018 with a 100 million $ deal in the middle east that did never materialize
Overall much has changed last year at COV with significant opex cutting, disposing a business unit, lots of cash to fund the growth of the superstar collagen product, a new BOD... I hope they have learned their lesson to underpromise but overdeliver.
Hopefully first quarter numbers can keep track and thereafter Covalon starts some intitiative to get coverage from a broker house/investment bank and some media attention as well.
Reminds me of SRTS which I also liked very much at 4 $ lately...