This Stock is a Three-Bagger

Investment and Company Research
Opportunity Research
TRADE ALERT

One of our favorite Opportunity Research (sponsored) companies released results last week and sales grew by 252% from last year to $14.1M with operating income increasing by 345%. The growth is outrageous which is why we believe it is an easy three-bagger.

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FOREVERGREEN WORLDWIDE CORPORATION

Strong Top-Line for Q2; Stock is an Easy Three-Bagger

Rob Goldman
rob@goldmanresearch.com

August 13, 2014
 

FOREVERGREEN WORLDWIDE CORPORATION (OTC:QB – FVRG - $0.93)

Price Target: $3.80 Rating: Speculative Buy
 

COMPANY SNAPSHOT

KEY TAKEAWAYS

ForeverGreen Worldwide Corporation develops, manufactures and distributes an expansive line of all natural whole foods and products to North America, Australia, Europe, Asia, South America and Africa. Offerings include their new global offering, PowerStrips. Additionally, they offer Azul and FrequenSea™ whole-food beverages with industry exclusive Marine Phytoplankton, Versativa line of hemp-based whole-food products, A.I.M. Transfer Factor immune support, 03World™ weight management products, Pulse-8 powdered L-arginine formula, TRUessence™ Essential Oils and Apothecary, 24Karat Chocolate®, and an entire catalogue of meals, snacks, household cleaners and personal care products.

 

KEY STATISTICS

 
Price as of 8/16/13 $0.93  
52 Week High – Low $2.00 – 0.45  
Est. Shares Outstanding 21.9M  
Market Capitalization $20.4M  
3 Mo Avg Vol 41,000  
Exchange: OTC:QB  
 

COMPANY INFORMATION

ForeverGreen Worldwide Corporation
972 North 1430 West
Orem UT 84057
801.655.5500
http://www.ForeverGreen.org
IR: Craig Smith
craig@forevergreen.org

Stellar Results for Q2: Late last week, FVRG reported strong financial results for 2Q14, affirming our thesis that this stock could reach the $3.80 mark. A conference call is scheduled for Tuesday, August 19, 2014, where we expect to glean additional information and we plan to issue a revised forecast in the near future. Therefore, our projections are under review.

Revenue up Big: Revenue of $14.1M was 252% higher than 2Q13 and 34% higher than 1Q13. Plus, it was 4% higher than our forecast of $13.5M. Gross margin increased markedly and operating income rose by 345% but net income was a bit light relative to our forecast. SG&A expenses were the culprit as this line item amounted to 76% of sales versus our 68% estimate.  We are not concerned at all as it is not uncommon for expenses to occasionally grow at an accelerated rate during a hyper-top-line growth phase and a move to a new HQ.  We are confident that management can right-size the situation in the coming quarters.

Enviable Metrics: In addition to the metrics above, FVRG has now sold product in 174 countries, and enjoyed its fifth straight quarter of operating profitability.  

Stock is Incredibly Undervalued: Management maintains it is on target to achieve $41-50M in revenue this year, compared with $17.8M in 2013. Based on 1H14 results, if quarterly sales remain flat for the next two quarters, FVRG would actually record over $50M in total revenue.  The stock currently trades at a market cap of around $20M, or .4x the potential $50M in revenue figure for 2014.  Even at our target price of $3.80, the shares would trade at a reasonable 1.6x the $50M in revenue number. Therefore, we continue to rate these shares Speculative Buy.

Recent Trading History For FNRG
(Source: Stockta.com)

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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.

Analyst Certification

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.

Disclaimer

This Opportunity Research report was prepared for informational purposes only. 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 product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports. It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. While stocks in the Opportunity format may have a higher risk profile, they typically offer greater upside as well. Since the initiation of coverage in December 2013, Goldman Small Cap Research has been compensated by the Company in the amount of $6,000 for a research subscription service and by a third party in the amount of $3500. However, GSCR did not receive compensation for the publication of this update. All information contained in this report was provided by the Company via filings, press releases, presentations, and 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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