Crappy stock that can make you stinkin rich
Updated
ERTH has been on my radar for quite some time and I believe the business model is sound. Pretty much what they do is recycle cattle manure to electricity and fertilizer and sell it . What's very impressive is on the previous quarter it's margin was almost 75% .
With a marketcap of only 24m and how scalable this project is it's notable on how much this can run based on what deals it can acquire. Some really important things regarding their balance sheet to consider.
1) From their previous quarter their current liability is 591k and on may 21 there was a 541,796 debt settlement at a price of .25
2) On May 27, there was a closing of an oversubscribed pp at 0.35 to raise $628,260
In short, their balance is extremely clean considering that they are in a "crappy" business .
3) There is a considerable amount of insider buying under .30 , indicating that the yellow area highlighted should be fairly strong support.
4) 64.34 % insider ownership
The biggest concern with this ticker is for obvious reasons if they can satisfy local odor concerns, and if so we should be expecting some decent contracts and may get a run similar to that of GRN.
On their latest presentation their subsidiary, replenish is expected to generate an annual rev of 10 .3m , and their stand alone erth renew facility is expected to have a rev of 4.4m so for a total of 14.7 m Rev, so based on the current market cap and projected rev we are getting a p/s of 1.63 of a company with a very clean balance sheet.
If things work out and they are able to work at full production then their revenue can 12x with an expected margin of 28%.
At this market cap and with how a similar company like GRN had it's amazing run , it's very possible for this to 10x . Furthermore, this could also become a buyout target from a big dog ,such as NTR, who is a major player in the fertilizer space.
Technical- we can see it respecting a trendline that coincides with a strong support area. Furthermore, it seems to be breaking out of a falling wedge with bullish divergence on the macd. This I believe indicates that this is a good time to buy and based on insider behavior and the deals that it has gone through, these prices present a great risk to reward buy.
With a marketcap of only 24m and how scalable this project is it's notable on how much this can run based on what deals it can acquire. Some really important things regarding their balance sheet to consider.
1) From their previous quarter their current liability is 591k and on may 21 there was a 541,796 debt settlement at a price of .25
2) On May 27, there was a closing of an oversubscribed pp at 0.35 to raise $628,260
In short, their balance is extremely clean considering that they are in a "crappy" business .
3) There is a considerable amount of insider buying under .30 , indicating that the yellow area highlighted should be fairly strong support.
4) 64.34 % insider ownership
The biggest concern with this ticker is for obvious reasons if they can satisfy local odor concerns, and if so we should be expecting some decent contracts and may get a run similar to that of GRN.
On their latest presentation their subsidiary, replenish is expected to generate an annual rev of 10 .3m , and their stand alone erth renew facility is expected to have a rev of 4.4m so for a total of 14.7 m Rev, so based on the current market cap and projected rev we are getting a p/s of 1.63 of a company with a very clean balance sheet.
If things work out and they are able to work at full production then their revenue can 12x with an expected margin of 28%.
At this market cap and with how a similar company like GRN had it's amazing run , it's very possible for this to 10x . Furthermore, this could also become a buyout target from a big dog ,such as NTR, who is a major player in the fertilizer space.
Technical- we can see it respecting a trendline that coincides with a strong support area. Furthermore, it seems to be breaking out of a falling wedge with bullish divergence on the macd. This I believe indicates that this is a good time to buy and based on insider behavior and the deals that it has gone through, these prices present a great risk to reward buy.
Note
Amazing! They got got a 3.2 million $ loan with "The ABL Facility contemplates a five-year term, including interest-only payments until January 1st, 2022. Amounts drawn on the main facility bear interest at a rate of 3.52% per annum, while the inventory loan rate is 2.875% per annum. On closing, an aggregate of $2,558,968 was drawn on the ABL Facility, with $1,592,291 used to repay existing senior debt. The ABL Facility is subject to compliance with financial covenants starting in 2022. "
This is really great leverage at a low cost for the company!
The RR from here is incredible imo and can more than easily double from these levels, imo
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