Element Nutritional Sciences (ELMT.CN) is an innovative and research driven Canadian nutraceutical company specializing in the development of science-based products for the global consumer packaged goods market, with a portfolio focused specifically on men and women over the age of 50. Element’s lead product, Rejuvenate, is a proprietary formulation that is clinically proven to assist in the rebuilding, restoration and rejuvenation of natural loss of muscle mass due to aging or other medical conditions.
The last I spoke about the technical set up on Element Nutritional was on September 21st/2021. My base case on supplements and vitamins still stays the same. This is a huge trend going forward. As we continue to borrow from the future to keep us sustained in the present (I am pointing my finger at the governments), future generations will have to pay more in taxes to receive the same amount of healthcare we have right now. This will kickstart a trend of older and younger people starting to be more health conscious. To be honest, look around. This trend is already beginning. But in the future, staying healthy and remaining healthy will be even more important given how badly governments have messed things up. Kevin O’Leary and Harvey Dent, the latter who is bearish markets overall, see vitamins and supplements as a big opportunity for the future.
In a somewhat more sad case…it is likely that older people will have to work even longer rather than retiring early. A lot of factors here including savings, inflation, and a market crash wiping out paper profits play a role. Some would even include Universal Basic Income replacing all pensions as a case for people working way past 65. Element Nutritional Sciences with their rejuvenate muscle health line, and similar products, will become even popular in maintaining strong bones and muscles for older people.
I said similar products, and this is the thing: there will be a lot of competition in this space. However, consumer spending habits are changing. Consumers I feel are more likely to spend the extra dollars on a health product from a reputable brand and for a product that is more healthy. We are talking about all those labels: dairy free, gluten free, sugar free, organic, plant based, low carbs high protein etc. In this case, Element Nutritional Sciences has an edge:
Before we get into the charts, let’s take a look at the new press releases since my last chart breakdown.
Element Nutritional Sciences is launching an innovative sports nutrition product under the JAKTRX brand. This will be a sports nutritional product using a higher dosage of Element’s plant-based amino acid formulation. The product is set to be launched on Amazon and the company’s own website in Q4 2021.
JAKTRX™ Pro Amino is estimated to improve muscle protein synthesis by 76%1 given the formulation’s composition of essential amino acids, as compared to an average whey-based protein powder which improves muscle protein synthesis by 35%2. Additionally, similar to Rejuvenate™, JAKTRX™ Pro Amino is plant-based and will be available in environmentally friendly packaging.
The company also provided a Q3 2021 operational update. The press release highlighted increasing sales velocity with large retailers, and an innovative pipeline update among other things. Highlights include:
- Walgreens sales velocity increases to over 10,000 units in September 2021 and sales through the Amazon e-commerce platform have increased 23% in Q3 2021 as compared to Q2 2021
- Completed the first shipment of 200 cases of Rejuvenate™ plant-based single serve pouches to iHerb in June 2021, selling out on the platform on the first day;
- Received an initial purchase order from Metro for 43 stores in Ontario;
- Launched Rejuvenate™ ready-to-drink organic plant protein beverage on Sam’s Club e-commerce platform in the United States;
- Entered into a brokerage agreement with Advantage Solutions, a consumer-packaged goods broker with over US$4 billion in revenue across 40 countries, to distribute Rejuvenate™ to retailers in North America and internationally;
- Engaged Canopy Management, which manages over US$1 billion of revenue on behalf of clients, to maximize awareness and sales across the Amazon platform;
- Signed a letter of intent with NaturalMadeCo., Ltd., to establish a joint venture to distribute Rejuvenate™ across the Asia Pacific region;
- Announced Q2 2021 financial results with revenue increasing 212% to $1.1 million and a gross margin of 22%;
Last but not least in a busy month for the company, Element Nutritional Sciences announced new distributors for their Rejuvenate products. This includes 36 Longo stores across Ontario beginning in late October. Longo’s is owned by Empire Company Ltd., which also owns the Sobeys, Safeway, Foodland, FreshCo, Price Chopper and Farm Boy grocery banners. Continuing the Ontario news, Rejuvenate plant based single serve pouches are also available across 23 newly added Fortinos locations in Ontario. Rejuvenate™ is now available at over 400 Loblaw Companies locations across Canada, including Shoppers Drug Mart, Loblaw and Fortinos.
To refresh your memory, I was watching for a trendline bounce back in September:
Things were looking positive. We wanted to see the flip zone of $0.725 break before being bullish. However, this did not happen. Instead we fell lower, and this is how the current Element Nutritional Sciences chart looks:
We dumped heavily on October 1st 2021, with a volume of 441,429 shares, 4x higher than average volume of 93,738 shares. That took us below a major support zone, and one we must climb back across to shift back to a bullish stance and price in a new uptrend. We retested this $0.625 zone as resistance on October 7th 2021. What was once support becomes resistance, but instead of crossing back across and neutralizing the downtrend move, we saw sellers pile in and took the stock even lower. On Friday October 29th, we had 220,956 shares traded giving us a -7.69% close.
We are back at retesting previous record lows which formed on October 25th 2021. The positive thing I can say is we can possibly find some support here. It is also close to the $0.50 price zone which is big for sup $1.00 stocks.
But right now, buying the stock is akin to catching a falling knife. Even though the recent news is fundamentally positive, technically, the stock is still in a strong downtrend.
Two ways to play this: Wait for some signs of buying in this area to indicate support. This means a formation of some sort of range, indicating the bottom is in. Or alternatively, and the safer bet, wait for the technicals to nullify this downtrend. This means waiting for a break and close back over $0.625.
In summary, I like the product, and I am bullish overall supplements and vitamins. I will be keeping an eye on Element, but there are other ways to play the vitamins and supplements trend especially since there are tons of competition in this space.
