Q: Can I please get your thoughts on Simply Solventless’ recent quarter. Would you throw some mad money into this company? Thank you for your service.
5i Research Answer:
Net sales grew significantly to $9.9M and net income also surged drastically to $8.4M. In early June, HASH dropped significantly after it amended the terms of $7.15M in notes payable to the former shareholders of ANC. It is a very small name ($22M market cap) and sales growth is strong, but it is cash flow negative. Its margins are improving and it trades at a cheap valuation of 0.9X book and 1.0X sales. Given the recent negative momentum, we would be quite cautious here, despite its cheap valuation, but it does have some positives, such as high growth and improving profitability. We would prefer to wait until its momentum improves before looking at this name more seriously.