Riddle me this – Why is Naturally Splendid (NSP.V) not lifting off.

batman and robin riddles
10/19/2017

As I continue to draft off Chris Parry, I want to follow up on today’s news NSP has acquired Prosnack Natural Foods. Can anyone tell me why their stock seems to sit like a frog on a log in the same spot.

From what I can see, this is a great deal for NSP. I love the private label business.

Every retail boutique / organic / local sourced shop wants to have their own artisanal aioli made with organic kumquats and the souls of meat-eaters. A huge market where you can get cash up front. What’s not to like?

If that isn’t exciting enough, once the rules for cannabis edibles are set, add in boutique and specialty lines for those too, and a well equipped plant is in the catbird seat to gobble up a big slice of the market.

Now that the deal is complete, NSP has a plant-in-a-box with baked-in revenue averaging $2M annually. It gets some strong brand partners, and inroads with retailers in lots of different markets. Can you say ready-made distribution channels for cannabis products?

So this all looks good, and investors are happy, they’ve also closed the last tranche of funding ($333,835). My question then is, WTF?! Why is the share price stuck in the same spot in morning trading it’s been in for the last six months?

Other than the brief run early in October (mentioned in Chris’ update linked above) the darn thing is still sitting at the same old level. I can’t help but picture the dark council of evil somewhere cackling and selling every time the stock shows signs of life.

So here’s the frustrating part for someone who thinks investing in a solid business that is making the right moves and y’know doing business – is a good idea. Why not give the company breathing room for chrissakes.

It’s not all doom and gloom, what it looks like is we have a well-managed, expanding business, securing funding and making good strategic decisions whose real-world value seems to be totally divorced from it’s market value.

So, is this a treasure or a trap? I suppose it depends a great deal on your investment strategy.

If you are stuffing a TFSA or are a buy and hold investor, I think it looks good. One day the vampires will lose interest, and the market will see the company for what it is and you could be holding a golden ticket.

If you are more volatile in your strategy, I don’t know how long this silliness will continue, there are a lotta shares out there. In this case, keep a weather eye on the stock, I suspect when it goes, it will go up fast.

Finally the cynic in me must admit that I am not all-seeing, or all-knowing, and maybe there’s a piece of the puzzle here i’m not seeing. If you have any thoughts, sound off in the comments. It’s a puzzler and I’d like to figure it out.

In any case I think I’ll see how much it would cost to launch my own private label of organic hemp based shaving cream.

 

Full Disclosure – Naturally Splendid is not a client, nor do I own any stock in it. 

Related Posts

Latest Post

Leave a Reply

Your email address will not be published. Required fields are marked *