Before the current CEO was appointed to the position in 2013, he was appointed COO in 2011 and instrumental to saving the company from the risk of bankruptcy due to the lingering effects of the great recession, as losses were hemorrhaging on weakening sales growth prospects.
The current CEO has spent the last 7 years realigning the company’s expenses, expanding the home goods product line from one main category to 25, broadening the company’s geographical presence from one country to eight and emphasizing selling its products on-line.
While COVID-19 has certainly given its online business a boost, the company’s on-line business had already been gaining traction. Even more importantly, the company’s products sold through traditional brick and mortar chains had been extremely healthy. So, we are not worried about weakening growth prospects when COVID-19 is in the rearview mirror.
Since 2011, the company’s annual revenues have grown from around $5 million to a current annualized run-rate of over $20 million, while net income has risen from a loss of $1 million to an annual run-rate of close to $4 million, with the pace of growth accelerating.
In summary, we believe the Target Company has reached a major growth inflection point which we think will continue for years to come, leading to shares rising by many multiples of their current price which are selling at a meager valuation.