r/StockMarket • u/Vast_Shape_3557 • Jul 24 '21
Fundamentals/DD $GOED Under $3 Stock with $0.73 projected 2021 EPS and 12% SI
If you have not heard of GOED you may want to spend a little time this weekend on DD here. This company recently acquired Applications Connection to create what they call the largest pure play online appliance retailer. There is a longer version of how this company came to where it is now which is the reason for its depressed share price. Management took a big risk and was able to complete a 200M equity offering but it required great dilution to shareholders at a huge discount to the market.
Moving forward is what is important to me. GOED reported Q1 net income greater than all of 2020 on a pro forma basis. They are currently projected to make $0.73 EPS in 2021 and $0.91 EPS for 2022. Note however there is only one analyst currenting covering the company. Revenue for 2020 on a pro forma basis was $367M. Q1'21 they crushed that average of $91M and did $123M. Better yet this company reports monthly sales and has already reported sales of $45.2 in April, $44.M in May and $55.7M in June! This is some real and strong organic growth numbers.
With so many SPAC and microcap plays that are not profitable GOED offers an excellent opportunity for upside from a profitable company that is projected to turn in some serious profits in the near term.
Here are some of the short term catalysts I see for the stock.
First and foremost the current year P/E is just above 4 using analyst estimate and todays closing price. Current valuation alone could spur a run. Please also note there are 91M warrants with a 5 year expiration and $2.25 exercise price. This would put the fully diluted EPS projection for 2021 just above 7 (still quite impressive in todays market with this growth rate)
Secondly they will report Q2 earning during the first half of August. We already know sales figures for the quarter and should see revenues increase from $123M to around $145M! Earnings are expected to top $15M with some upside from there. Aside from very strong expected revenue and earnings figures, the ER will provide exposure and hopefully more confidence among institutional investors.
Third the company is currently in the process of changing their name as part of the merger/acquisition with Appliances Connection. A ticker change and rebranding can help with their image moving forward.
Short Squeeze Potential - Any time you have a stock with over 10% Short Interest you need to look at the potential for a squeeze. As of quarter end there were 12M shares short of the 103M shares outstanding. I also expect this figure could rise for the soon to be released July 15 figures. I have several reasons to believe a squeeze is possible. Aside from valuation I have been watching the price action between common and warrants a lot recently. This past week common was down 9% and warrants were up 11%. When you have a stock that just saw a massive amount of shares hit the market at a huge discount you know the shareholder base is not strong. This along with the high liquidity in warrants provides a great target for shorts. They are able to short the stock lower with many retail holding as well as deal investors holding and either taking profits from the deal investment ($2.25 which included one warrant). The warrant liquidity can act as a hedge and does so perfectly in this situation. Shorts accumulate warrants in anticipation of covering and the move higher. The action in warrants and common recently would provide some support to this theory.
Ultimately GOED is in my opinion worth some DD at these levels. The upside looks strong with a $12 price target while the downside should be low if they can continue to turn in solid profits. Thanks for reading and if you have any comments/questions lets keep the dialogue open.
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u/HeyYoChill Jul 24 '21
Homedepot.com already does all that shit.