GEO Investing

Yesterday via a premium tweet we stated, due to strong earnings of a stock that we have been holding for over two years, we would aggressively add to our long position – a testament that patience, discipline and conviction pays off.  The stock is up 70% since our call. While we were not able to add as much as we would have liked, but we picked up some shares nonetheless.

Minutes before yesterday’s open, the company, a manufacture of of pharmaceutical products for both humans and animals, reported strong bottom line Q1 2016 results on moderate sales growth.

  • Q1 2016 sales of $1.5 million vs $1.4 million in the prior year period.
  • Q1 2016 EPS of $0.09 vs $0.02 in the prior year period.

Coded as a GeoBargain at $0.81 and now trading 70% higher

We first coded the company as a GeoBargain on July 2, 2013 when the stock was trading at $0.81, and the company just hit a 52 week high of $1.38, 70% higher over our original call.  On July 19, 2013 we released our bullish article highlighting why were bullish.   The stock briefly rallied but pulled back as the company faced operational challenges over several quarters as it worked through equipment and facility upgrades.  While the investments were made to improve production capacity and attract customers who required these upgrades, there were partial shutdowns throughout the upgrading process.

It appears that the investments are now beginning to pay off.  Quotes from management:

“the investments we made in equipment upgrades really helped increase our production capacity and fill orders. Customer audits of our facility allow them to see the benefits of the upgrades and appreciate our focus on consistent production of the high quality products they have come to expect from us.”

The company has had a history of reporting inconsistent quarterly results.  However, with back to back strong quarterly results coupled with management’s bullish commentary, we feel the company may be on the right track to begin reporting consistent operating results.  We will look to speak with management once again to see if this momentum can continue and to see if the sales mix of higher margin products (powdered products) will remain steady or even increase. We will likely look to continue to add to our position as we complete our due diligence process.

To our original bullish thesis that is paying of for our long-term premium members, please go here.

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