Mathieu Martin - Stocks and Stones Those who’ve been following Crescita for a significant amount of time know that the stock has been a value trap. Although the business has changed over the years (in positive and negative ways), the stock price is the same as seven years ago.
The company has $9 million in cash on the balance sheet, no debt, and trades at an $11-12 million market cap. The market is assigning almost no value to the operating business.
Crescita has three main revenue streams: the sale of non-prescription skincare products, the contract manufacturing of skincare products for other brands, and royalties on a prescription product called Pliaglis that’s out-licensed to partners worldwide.
I recently became more interested in Crescita due to an acquisition and several new contract announcements (look up the press releases since June). These announcements should lead to revenue growth on the non-prescription side of the business. On the prescription side, the company is in talks to find a new partner for Pliaglis in the US, which could lead to a few million $ of additional royalties per year over time.
It’s still too early to tell if the company will be able to grow revenues and sustain profitability on an ongoing basis, but if they do, it likely won’t trade at this valuation for long. Deep-value investors should keep an eye on this one.