Get ready for a broad-based snapback rally for companies in the restaurant, food, and hospitality sector. And after 18 months of unprecedented economic and logistical challenges, the biggest rewards could come to micro-cap companies that saw their valuations decline as investors questioned their ability to weather the storm. That forecast could be great news for Gourmet Provisions International Corp (OTC: GMPR), who not only survived the crisis but is set to emerge potentially stronger than ever.
Indeed, stocks in every sector have taken a beating since 2020. Even growth stock favorites like Chewy (NASDAQ: CHWY), Fiverr (NASDAQ: FVRR), and Tesla (NASDAQ: TSLA), each of which reported record-setting results, saw its valuations decline as investors took profits ahead of continued economic uncertainty. However, these same sellers are now chasing prices higher as headlines show that consumer markets are returning to more normal conditions sooner than expected. Expect that pattern to happen for GMPR.
In fact, GMPR is deserving of renewed attention. In the past two quarters, they took significant steps to create opportunities from hardship and inked deals that could translate into massive revenue-generating triumphs.
Better still, at least two deals could drive shareholder value higher in the next few weeks. Thus, trading ahead of the news could be beneficial to growth stock investors.
Multiple Deals In-Play
The first value-generating catalyst is likely to come from an update on its recently announced high-margin contract with its Pizza Fusion subsidiary. That deal is expected to generate revenues over $675,000 this quarter, and better still is likely the first of many near-term Pizza Fusion contributions. In fact, GMPR believes they have an opportunity for massive product expansion by targeting a shift in consumer dining patterns created by the pandemic.
Also in focus is a deal that could be one of GMPR's most significant in history. This one, scheduled to happen as early as this quarter, brings GMPR together with a New York Times Best-Selling author and comedian to launch a specialty line of products, the first targeting the massive 272 million person pancake and syrup market. Expectations are for this deal to follow trends of other celebrity-partnered products that generate mega-millions in revenues by leveraging a quality product with a famous name brand.
It will also expand its asset portfolio by adding another high-margin product to its portfolio. Best of all, from an investor's perspective, its launch could serve as a significant catalyst that adds an additional source of revenue. Moreover, with speculation rising that the celebrity is an extremely well-known personality, the product and partnership could become a home-run for GMPR. Keep in mind, Ciroc Vodka, Patron Tequila, and Casamigos Tequila started as small celebrity partnered brands. Each, though, is valued at well over a billion dollars in today's market.
A third deal earning attention is an extension of its agreement with Christopher Street Products. There, GMPR increased its ownership stake and is accelerating plans to broaden its licensing contracts, which, by the way, is happening through GMPR's ambitious acquisition strategy.
And while those deals all provide promising long-term revenue streams, investors can expect more in 2021. Having successfully navigated the economic challenges created by COVID-19, company management has made no secret of its intent to pounce on promising acquisition opportunities. Most importantly, they have proven they can create, develop, and close potentially lucrative deals.
That ability exposes an investment opportunity.
Management Extends Brands Opportunities
Gourmet Provisions may be trading at around $0.05, but its low price is more a result of uncertain markets than an indication of where GMPR will end 2021. After all, its history tells of nothing but growth.
Gourmet Provisions has grown from a three-store pizza operation to a company with four wholly-owned subsidiaries, each targeting its own market opportunities. Better still, because of pro-active maneuvers, these subsidiaries are better positioned than ever to penetrate their respective categories in the back half of 2021. Thanks there goes to its experienced management team.
Gourmet Provisions seized an opportunity by hiring industry veteran Jack Brewer from Brewer Media Group as a Brand Ambassador. His expertise helped GMPR navigate the challenges imposed by the pandemic and is instrumental in expediting the company's aggressive business strategies to create value sooner rather than later. In fact, the carefully orchestrated strategic moves in Q1 have placed GMPR in an excellent position to leverage its assets to drive record-setting performances during the second half of 2021.
The most significant push in revenues could come from new strategies that focus on online sales. Even in the early stages of the market recovery, its online presence is helping to change the revenue-generating trajectory at the company. Add in an updated and attractive social media footprint and a determination to act upon potentially lucrative acquisitions, GMPR has aligned its strategies to create substantial shareholder value.
Subsidiary Traction
The sum of its assets should already be deserving of a substantially higher valuation. In fact, its wholly-owned subsidiaries - Jose Madrid Salsa, Pizza Fusion, Exclusive Tap House, and PopsyCakes – each is positioned well to capitalize on new and emerging opportunities. The good news is that GMPR understands how to go about maximizing the value of each. The past 18 months slowed progress, but GMPR didn't stall.
In fact, GMPR is in growth mode. And while the inherent value from multiple ownership stakes appears to be entirely neglected in current valuations, news and a strengthening market will likely change that market disconnect.
Even better, GMPR is developing a plan to make each subsidiary contribution accretive by reducing redundant overhead. Furthermore, the launch of its celebrity-partnered pancake and syrup business also has helped establish a concise marketing plan that extends through its product lines. Thus, expect that its brands will benefit from more substantial and effective marketing campaigns in the next few months.
Analyzing Potential Share Price Appreciation
The excellent news for investors is that GMPR is a revenue-generating company. And those revenues will be met by an improved capital structure. In Q1, investors were pleased following the company's announcement that Authorized Shares had been reduced from 3 billion to 300 million. Currently, GMPR only has around 75 million shares issued and outstanding.
Investors also hit the bid after learning that GMPR entered into Lock-Up arrangements with its noteholders, restricting each to just eight million common shares until August 31, 2021. Although there is still dilution, the agreements come at a good time for GMPR and its shareholders by easing selling pressure from early investors. However, the arrangements put other things in play.
Most significantly, the standstill agreements allow GMPR to accelerate steps to earn an uplisting to the NASDAQ markets. Moreover, the lock-up agreement gives Gourmet Provisions the required time to audit its financials, file its S-1, sign an underwriter, and, most importantly, generate the valuation necessary to apply for an uplist. As a result, GMPR's improved balance sheet, accretive acquisitions, and a strengthening economy could all converge to make the rest of 2021 a breakout year for GMPR.
Keep in mind, too, with the lower number of shares in the public float, GMPR's $233,000 profit in the third quarter and its $675,000 Pizza Fusion contract should more quickly impact revenue/multiple valuations. And with additional revenues coming as soon as next month from subsidiaries and partnerships, share prices will likely trend higher, not lower.
As a result, now is a great time to consider the value opportunity in GMPR stock. Also, with at least three near-term catalysts lining up to create value in the coming weeks, the chance to invest at current prices may not last long. In fact, with several potentially lucrative deals in play, the window at the $0.05 level may soon be closed forever.
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