While the stock market’s performance of the past two days is enough to give most investors pause, an opportunity exists to invest in an under-the-radar firm in a fast-growing industry that trades at a low valuation relative to its peers and our price target.
We initiated coverage of ML Capital Group (OTCQB – MLCG), an emerging company in the e-cigarette and vapor pen space, in June and the stock more than doubled in a matter of weeks as it had been oversold. The Company, and its industry are on a tremendous sales growth trajectory and we outline four reasons why to buy the stock in our latest research update.
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Reason #3: Stock is way too cheap
As noted in our June report, MLCG’s valuation pales in comparison to its publicly traded peers. For example, e-cig leader MCIG, which carries a $145M market cap, recorded sales of $110,000 for 1Q14 and vapor company Vape Holdings (OTCQB – VAPE), which recorded an estimated $31,000 in Q1 sales, carries a $19M market cap. This compares with the current $2M market value assigned MLCG. Even at our target price of $0.24, the market cap would only be $20M. As a result, this under-the-radar vapor pen and medical marijuana play offers the greatest upside, in our view.
Reason #4: U.S. market trends are in the Company’s favor
Just yesterday, Washington State became the second state in the country to open the market for the legal sale of recreational marijuana. Plus, other states and jurisdictions have gotten into the act. On Monday, the State of New York became the 23rd state in the union to legalize and permit the sale and use of medical marijuana, while in the District of Columbia voters appear to have gotten enough votes to have proposed recreational marijuana approval legislation on the ballot in November. All of these steps can exponentially increase the size of MLCG’s market.
Bonus: With the stock market reeling, it should be noted that since a stock like MLCG does not trade in correlation with the broader market, the stock could offer a speculative, high potential alternative for opportunistic investors.
For more information, please read or download our detailed Company Report issued on June 17, 2014. http://www.goldmanresearch.com/20140617787/Opportunity-Research/the-top-vapor-pen-opportunity.html
Recent Trading History For MLCG
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Senior Analyst: Robert Goldman
Rob Goldman founded Goldman Small Cap Research in 2009 and has over 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.
I, Robert Goldman, hereby certify that the view expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report.
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Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research and Goldman Opportunity Research. The Select format reflects the Firm’s internally generated stock ideas along with economic and stock market outlooks. Opportunity Research reports, updates and Microcap Hot Topics articles reflect sponsored (paid) research but can also include non-sponsored micro cap research ideas that typically carry greater risks than those stocks covered in the Select Research category. It is important to note that while we may track performance separately, we utilize many of the same coverage criteria in determining coverage of all stocks in both research formats. Research reports on profiled stocks in the Opportunity Research format typically have a higher risk profile, and may offer greater upside. Since June 2014, Goldman Small Cap Research has been compensated by the Company in the amount of $5500 for research subscription services, including $1500 for this update. All information contained in this report was provided by the Company via filings, press releases or its website, or through our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
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