By Jim
Bloom
Posted on October 12, 2018
News on the reclassification of a marijuana-based drug from a
Substance I drug to a Substance V control drug has sent shockwaves
through the cannabis sector. As a result, players within the sector
now have the chance to produce more drugs and sell them over the
counter without the fear of incitement.
Using the above premise, firms invested in the cannabis sector
especially in Pharma continue to benefit greatly from the above
news. Furthermore, there has also been a lot of traction towards
cannabis beverage companies which are currently counted in the
industry. With the industry currently standing at $820 million as
at 2017 and expected to grow to $2 billion over the next 5 years,
individual and institutional investors alike have continued to pour
into the sector with the hope of having a piece of the 54%
compounded return.
One such company is Puration Inc (OTCMKTS:PURA), which
we recommended back in February.
The firm whose share price has been quite volatile over the past
one year continues to rise by the day. Over this period, they have
had two periods of booms and successive declines which have seen
the share price oscillate between $.08 and $.02. However, the share
price is currently trading just shy of $.09, significant of the
highest price hit during the year. Moreover, the shares traded have
also increased drastically to over 20 million with the average
number standing above 40 million.
The chart below further explains this price movement:
The reason for such a momentum exuded by the share price is
usually either an expected event over the near future or an
announcement made by the company which is expected to influence
their future performance – sometimes a change of law can also have
such an impact. In this case, we are thus looking into PURA so as
to establish the reason behind such a price surge and evaluate
whether the surge is merely a shock or a lasting price
movement.
HISTORY OF PURA
Before going into the intricacies, however, let us have a look
at the history of PURA. Puration Inc was founded back in 2011 and
headquartered in Dallas, Texas. The firm deals in the entire chain
of water purification: design, development, production, marketing,
and distribution of purification products which they sell under the
Filter 2GO brand.
RECENT DEVELOPMENTS
Over time, however, they have morphed further into the cannabis
sector with an incline towards the development of CBD-infused
beverages. The venture has seen them work towards developing the
aforementioned brand to ensure that they can ably compete with
major players such as Aurora Cannabis
(OTCMKTS:ACBFF) which is currently working hand
in hand with Coca-Cola to venture into the same space as well
as Canopy Growth Corp
(NYSE:CGC) which just last year received over $40
million investment – for 9% stake – from Fortune 500 company
Constellation Brands (NYSE:STZ), an investment which would aid both
firms venture into the same segment.
The result has been that firms have started to view the segment
as profitable thus raised interest in it. With PURA already having
a standing in the segment, it is expected that their brand will
play a pivotal role in ensuring that they successfully curve their
niche and consequently grow.
CONCENTRATION ON CANNABIS
Puration Inc announced late last year their new strategy which
would see them venture aggressively into the cannabis sector with a
specific incline towards boosting their cannabis-infused beverage
business. As a result, the firm begun seeking acquisitions as well
as broadening their product line. This has seen them launch new
products over the past 12 months as well as acquire two new firms
in a bid to grow their cannabis stock portfolio.
Currently, the firm has been spinning off their current assets
within other business segments. The most recent of these was the
spin-off of Nouveau Life Pharmaceuticals Inc (OTCMKTS:NOUV) which
operates within the cultivation segment. The result will see the
shares of NOUV issued to PURA as stock dividends. The latter is but
one of a number of transactions which will see PURA exit their
current business segments and focus on beverage segment.
The latter is already happening.
Last year, the firm launched their first beverage, EVERx CBD
Sports Water. Since then, their revenues have been drastically
rising with the revenue growth currently standing at 600%.
Moreover, they are currently developing a new THC-infused product
dubbed THCSavor, a move which is expected to be consequently
followed by their acquisition of a cannabis player operating within
the beverage sector.
THE SPECULATIVE GROWTH COMPANY
A recent report by Goldman Small Cap Research concluded that
Puration Inc was a speculative buy. The firm also indicated a
target price of $.25 per share, a near 200% upside on their current
price.
Pegging the above growth on the industry’s expected $2 billion
sales expectation, Goldman stated that there is a lot which PURA
can do to harness this opportunity. In the report, Goldman noted
the current growth the firm is experiencing especially within the
beverage segment as being a key factor in determining their future
prospects. It stated:
“Puration’s flagship product has enjoyed 600% sales growth
since its introduction in 2017. Leveraging this growth, Puration
plans to execute M&A and introduce new beverage
products”
Source:
The report further noted the importance of the current M&A
strategy the firm has executed as well as the spin-off which are
expected to be key in the firm’s upside potential:
“In our view, these shares are trading at very low levels
and offer substantial upside… Thus, we believe the stock could
reach higher levels as PURA executes its sales and M&A
strategy”
Source:
As a result, the analysts predicted a higher target price,
signaling their belief in the value expected to be realized from
PURA. Investors need therefore to keep a close eye on the firm
going forward.
CONCLUSION
Overlain an already growing sector, PURA’s growth is expected to
be accentuated in the future. Given this, investors expect a high
reward from the firm both in the near and distant future, in line
with the expectations of analysts. We therefore are bullish about
the firm’s price.
We will be updating our subscribers as soon as we know
more. For the latest updates on PURA, sign up below!
Disclosure: We have no position in PURA and have not been
compensated for this article.
RELATED ITEMS:AURORA CANNABIS, AURORA CANNABIS
(OTCMKTS:ACBFF), CANOPY GROWTH CORP, CANOPY GROWTH CORP
(NYSE:CGC), NYSE:CGC, OTCMKTS:ACBFF, OTCMKTS:PURA, PURATION INC., PURATION INC. (OTCMKTS:PURA)
https://insiderfinancial.com/puration-inc-otcmktspura-upside-potential
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