Sales Keep Heading Up Up Up!
Yesterday was a good day for MicroStockProfit subscribers. If you jumped on our Monday morning pre-market Nighthawk Systems (OTCBB: NIHK) alert, you likely got a nice investment gain to go with your frenzied Monday morning. Closing Friday at $0.08, NIHK was on our radar for a strong following week in the market. Hopefully, many of you got to pull a little off the table as it traded up on HUGE volume yesterday morning and closed at $0.106 (just a hair off its intraday high of $0.107) - a gain of over 32%! Not a bad way to kick off your week. Now on with the show. . .
Over the past year, we have seen quite a bit out of Execute Sports Inc. (OTCBB: EXCS). The company has emerged from virtual upheaval and is reaching milestone after the milestone. Today, EXCS is out with yet another positive news release that should have investors and shareholders excited for the future of the rapidly emerging water sports player. According to EXCS, preliminary orders for 2008 OEM produced Life Vests will increase by nearly 61% over 2007 production.
While the 61% figure on its own doesn't do a heck of a lot for us, after peeling through a number of recent corporate announcements, I stumbled upon news dated 4/17/07" Execute Sports, Inc. Announces 2007 OEM Sales Rapidly Approaching $1 Million"
So applying a little "back of the napkin" math and making the assumption that overall OEM sales are growing at roughly the same rate as OEM life vests, pre-orders for 2008, which hasn't even technically begun yet, equate to nearly $1,600,000 in 2008 revenues. Even if life vest sales contribute only 30% to overall OEM sales and this is the only private label OEM product experiencing such tremendous growth, we're still looking at a very healthy increase since these are 2008 orders are being logged with about 2.5 months left in 2007.
For a company that logged only $2,000,000 in 2006 revenues, this is a major deal - particularly since OEM/Private label sales make up only a small portion of the company's overall sales and we are only speaking in terms of preliminary orders. Actual 2008 OEM sales will likely be much higher given the many months that Execute now has to log more orders.
Sometimes, a list is the best way to get a handle on company details. Let's take a look at some of the positive forces that are currently working in sync to foster a positive future for Execute Sports. Here are a few of my favorites in non-chronological order.
1. The Chart - EXCS shares have found support in the $.02 range and investors don't seem at all willing to part with the stock at lower prices. It appears that we have reached a bottom, and judging by the ongoing improvements being made on behalf of management, it doesn't seem like we can stay parked here forever. The company is simply performing too solidly, both from a financial and operational perspective for that to happen.
2. Record Sales - After announcing all-time record high sales for the second quarter back in July, Execute has issued a string of very positive corporate announcements regarding many aspects of their stellar sales performance. As of 9/27/07, Year-to-date internet sales had increased 38% over 2006 and Execute branded products were accounting for nearly ½ of ALL online sales in each of their core product lines. This rapid growth (online sales just started in March of '06) has been facilitated through management's ability to get their products online with leading retailers including: The Sports Authority, Dick's Sporting Goods, Joe's Outdoors, Sport Chalet, Modell's and MC Sports.
3. Recent $5,000,000 Sugar Sand Boat Acquisition - By purchasing Sugar Sand, Execute, recognizes the benefits of both a cash influx of $7-10 million during year one and the addition of a complementary brand. U.S. law stipulates that all recreational boats must carry one wearable PFD for each person aboard and that each passenger under 12 years of age must wear a flotation device at all times. Essentially, for every Sugar Sand jet boat that is sold, the company has the opportunity to sell a few additional PFDs. In addition, Sugar Sand has developed a very strong dealer/distributor network to which Execute can pitch its brand to for the first time. This move should also provide the cash and equity necessary to fund further growth through acquisition. How could management possibly pass this deal up?
4. Audited Financials Improving by almost every Conceivable Metric - The improvement to both revenue and gross profit over the trailing three quarters is a direct indication that management has got its act together and is ready to move toward profitability. Operating income improved during the second quarter over the previous reporting period and SG&A expenses stayed flat despite substantial revenue growth (44%). Simply put, the corporate re- organization was a smashing success and the company is much more operationally efficient now than it was just one year ago. I expect upcoming financials to bring more of the same improvement, but only time will tell.
5. Product Placement & Brand Recognition Have Never Been Better - With Kawasaki re-ordering, Execute products being prominently featured on major television outlets including MTV, ESPN, and the E channel, and the company's all-star sales team introducing its revamped 2008 line at the world's largest water sports expo recently, product placement and brand recognition have never been better. This bodes extremely well for future growth as the world is just getting their first taste of Execute Sports products.
Execute Sports Inc. keeps getting more attractive. Financial or revenue news is always a good jump start for EXCS stock but I think this little company is just getting started. Take, for instance, a look at the OTC Bulletin Board for companies currently trading in the $.02 range. Measure them against Execute's recent performance, its strong sales and revenue increase through 2007 and you will see why we like to call this one our diamond in the rough.
I suggest watching this one closely over the next few months as the Sugar Sand segment becomes more integrated into Execute's daily operations, financials are released, and business as usual continues. It may take a while for the affects of the increased orders to be seen in the market, but EXCS is building a strong foundation for an explosive 2008.
Traders - We are looking for a similar performance from EXCS as we saw yesterday with NIHK.
Labels: Breakout, Dick's Sporting Goods, ESPN, EXCS, Execute Sports, Joe's Outdoors, Kawasaki, MC Sports., Modell's, MTV, Nighthawk, Nighthawk Systems, NIHK, Sport Chalet, The Sports Authority
posted by "Staff" at
5:39 AM
- Post a Comment
