Delta Variant vs Bulls AUG 2021 Update

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Wed, Sep 15, 2021 at 6:15 AM PDT

 

Maltbie's Minute on the Market a look back at August 2021 The Delta Variant vs Bulls

 

 

Market breadth & valuations are troubling , Delta variant impact and opportunities in Online Sports Betting, time to reconsider the re-openers ? Rush Street Interactive (RSI) stock of the week. (8/8/21)

 

Singular Research August 2021 Director’s Letter

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Singular Research’s August 2021 Director’s Letter

 

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In August, stocks continued to climb higher as the S&P 500 has now increased for seven straight months, its longest winning streak since January 2018. August historically has been one of the worst performing months for stocks; however, 2021’s August did not follow historical trends. Interestingly, Delta variant fears, inflation concerns, and supply chain constraints were not enough to move markets lower. Many believe Fed Chair Jerome Powell’s dovish comments to “support the economy for as long as is needed to achieve a full recovery” outweighed all the other negative market sentiment for the month. Large cap stocks outperformed small caps while large cap growth outperformed large cap value. 98% of S&P 500 companies reported by the end of August with 89% of those companies posting earnings growth; the average upside beat was 16.4% and sales estimates were 4.6% higher. Financials, Communications, and Utilities led the way with 5.1, 5.0, and 4.1% returns respectively while Staples, Industrials, and Energy were the biggest losers with 1.4, 1.1, and (2.0)% returns, respectively. Markets continue higher led by a never-ending dovish Fed. Laissez les bons temps rouler! (Let the good times roll!)

The August Purchasing Managers Index® (PMI) registered 59.9 percent, an increase of 0.4 percentage points from the July reading of 59.5 percent. Similarly, the Conference Board Leading Economic Index® (LEI) increased 0.9 percent in July to 116.0 (2016 = 100), following a 0.5 percent increase in June and a 1.2 percent increase in May. The July PMI reading indicates economic expansion for the 14th consecutive month. The unemployment rate decreased 5.4% in August (5.9% in July) as businesses have started the rehiring process.

 

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For the month of August, the Singular coverage list outperformed the S&P 500 and Russell 2000 by 1,016 and 1,068 basis points, respectively. Over the last twelve months, the Singular coverage list outperformed the S&P 500 and Russell 2000 by 9,808 and 8,180 basis points, respectively. Since our 2004 inception, the Singular coverage list has outperformed the S&P 500 and Russell 2000 by an annualized 559 and 539 basis points, respectively.

 

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For August, our top three performers were acquired, hence the large monthly price returns and our lack of future price targets. RSI had a strong Q2 earnings report with revenue up 89% year-over-year; the Company increased full year 2021 revenue guidance as well. TA also reported a strong Q2 as the Company’s net income increased to $28.9 million, an increase of $26.8 million from the prior year. Adjusted EBITDA increased to $73.5 million, an increase of 60.6% year-over-year.

 

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BBKCF was our worst performer for the month as the Company reported Q2 results that did not appease market participants; revenue increased 24% sequentially which is strong, but apparently not satisfactory for crypto currency investors. ZM fell similarly as the Company posted year-over-year revenue growth of 54%; however, ZM guided for Q3 revenue and adjusted EPS to be weaker than Q2 results. LUNA also had a poor month as the Company’s Q2 results were weaker than expected after the OptaSense acquisition.

 For the month, we initiated on Riot Blockchain, Inc. (RIOT) and Gogo, Inc. (GOGO). RIOT is the largest publicly traded cryptocurrency mining company in North America. Its mining operations are based out of Coinmint LLC’s facility in Massena, New York and the recently acquired Whinstone facility in Texas. GOGO is the world’s largest provider of broadband connectivity for the business aviation market. Its products offer equipment for inflight connectivity, including voice and data services for the North American market.

 

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We wish to thank our clients for their support and belief in our process. To learn more about Singular Research and register for a 14-day trial offer, please follow the link below.

 

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Robert Maltbie, CFA
Singular Research, President
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GreenBox POS: Management’s Execution Is Remarkably Good

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GreenBox POS: Management’s Execution Is Remarkably Good

 

August 26, 2021

 

Price (as of close on August 25, 2021)

$8.58

 

Rating

BUY

 

Price Target 

blocked

 

GreenBox POS, a technology company, develops, markets, and sells blockchain-based payment solutions. The Company's blockchain-based systems are designed to facilitate, record, and store a volume of tokenized assets, representing cash or data, on a blockchain-based ledger. GreenBox POS was incorporated in 2007 and is based in San Diego, California.

 

 

GreenBox POS (GBOX)

In Q2:21, GBOX had revenue of $6.4 million, representing growth of 178% YoY and 36% sequentially. GBOX processed a quarterly record of $440 million in transaction volume, up 40% from Q1:21. In the quarter, the Company made several key acquisitions and business arrangements that have framed GBOX for a successful global launch of COYNI. We have reduced our price target from $33.00 because earlier we did not discount GBOX’s valuation enough since most of its revenue comes in 2022 and 2023. However, after increasing the valuation discount, we reiterate our BUY rating with a blocked price target.

 

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Q2:21 Highlights

  • Revenue grew 178% YoY and 36% sequentially to approximately $6.4 million in Q2:21, compared to $2.3 million for the same quarter one year ago.
  • GBOX processed a quarterly record of $440 million in transaction volume, up 40% from Q1:21’s processing volume of $315 million.
  • The Company deployed COYNI, their smart contract technology stablecoin, in a pilot launch and deposited $5 million in initial seed capital at Signature Bank.
  • GBOX acquired Transact Europe, a Principal Visa and Mastercard member with key licensing assets and a significant processing volume portfolio.
  • Partnered with the Territorial Bank of American Samoa to provide customized payment solutions software throughout American Samoa.
  • We are bullish on GBOX’s long-term prospects. We reiterate our BUY rating with a price target of blocked.

 

PRIMARY RISKS

  • Merchants could be slow in adopting Gen 3 and/or the token. This hesitation could result in lower processing volume and revenue.
  • The joint venture in the GBOX token may be delayed or be less than anticipated.The Company’s performance in linked to the market price of Bitcoin which has high volatility.

 

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Riot Blockchain: Recent Acquisition Is A Testament To Management's Long-Term Thinking

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Riot Blockchain: Recent Acquisition Is A Testament To Management's Long-Term Thinking

 

August 18, 2021

 

Price (as of close on August 17, 2021)

$32.76

 

Rating

BUY

 

Price Target 

blocked

 

Riot Blockchain is the largest publicly traded cryptocurrency mining company in North America. Its mining operations are based out of Coinmint LLC’s facility in Massena, New York and the recently acquired Whinstone facility in Texas.

 

 

Riot Blockchain Inc. (RIOT)

Riot Blockchain is the largest publicly traded cryptocurrency mining company in North America. Recent large-scale purchase orders of Antminers and the acquisition of Whinstone Mining has positioned the Company to significantly increase its Bitcoin mining hash rate. We initiate with a BUY rating and a blocked price target.

 

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Investment Thesis

  • Riot Blockchain is the largest publicly traded cryptocurrency mining company in North America.
  • Recent large-scale purchase orders of Antminers and the acquisition of Whinstone Mining has positioned the Company to significantly increase its Bitcoin mining hash rate.
  • The acquisition of Whinstone adds 300 MW of capacity (expandable up to 750 MW) and provides Riot with a clear and de-risked path to growth.
  • The declines in network hash rates following the crackdown on crypto mining in China is bullish for North American miners. The decrease in competition has created an enhanced profitability window for miners like Riot.
  • The company is poised to grow revenues and earnings over the near-to-medium term. We initiate coverage with a BUY rating and a price target of blocked.

 

PRIMARY RISKS

  • The Company’s performance in linked to the market price of Bitcoin which has high volatility.
  • Cryptocurrency regulation, both in the United States and internationally, could adversely affect the price of cryptocurrencies and the cryptocurrency mining industry.

 

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Singular Research's Compelling Values Webinar 9/16

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Mon, Aug 16, 2021 at 6:15 AM PDT

 

REGISTER NOW

Please join us for our Compelling Values Webinar on Thursday, September 16 starting at 6:30 AM PDT. The prospective presenting companies are listed below. All times are in PDT.

  • Voyager Digital Ltd. (VYGVF)
  • Riot Blockchain, Inc. (RIOT)
  • Bigg Digital Assets Inc. (BBKCF)
  • Emergent BioSolutions Inc. (EBS)
  • good natured Products Inc. (GDNP.V)
  • Luna Innovations Inc. (LUNA)
  • Iradimed Corp. (IRMD)
  • Seabridge Gold Inc. (SA)
  • Giga-tronics Inc. (GIGA)
  • IEC Electronics Corp. (IEC)
  • Esports Entertainment Group Inc. (GMBL)
  • Canasil Resources Inc. (CLZ.V)
  • Banco Latinoamericano (BLX)
  • Dynasty Gold Corp. (DGDCF)
  • Graphite One Inc. (GPHOF)
  • Salem Media Group Inc. (SALM)
  • Acme United Corp. (ACU)
  • Comtech Telecommunications Corp. (CMTL)
  • Harvard Bioscience Inc. (HBIO)

After registering, you will receive a confirmation email containing information about joining the webinar.

Emergent BioSolutions: Primed For Booster Takeoff

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Emergent BioSolutions: Primed For Booster Takeoff

Emergent BioSolutions (EBS) is a global specialty life sciences company that develops and commercializes vaccines, drugs and devices that address public health biodefense threats. The Company is a preferred provider of biodefense products and services to the U.S. government under multi-year contracts. Its portfolio includes the only FDA-approved anthrax vaccine and smallpox vaccine and NARCAN nasal spray for treating opioid overdose. The Company’s products are sold mainly in the U.S. as well as internationally.

 

August 2, 2021

Price (as of close on July 30, 2021)

$65.92

 

Rating

BUY

 

12- Month Target Price

blocked

 

Emergent BioSolutions (EBS)

EBS secures FDA permission to resume production of the Johnson & Johnson COVID vaccine at its Bayview facility. We reiterate our Buy rating and blocked price target. 

ebs q2 21 highlight

 

Q2:21 Highlights

➢EBS announces plan to resume production of the Johnson & Johnson COVID vaccine at its Bayview manufacturing site. The facility has the capacity to manufacture 120 million doses per month

➢The US Dept. of Health and Human Services exercise contract options valued at $182 million covering delivery of doses of the company’s ACAM2000 smallpox vaccine in 2021 and $56 million covering delivery of its VIGIV smallpox therapeutic.

➢EBS builds revenues outside the US by securing a contract with the Canadian government for deliveries of Anthrasil, its’ treatment for inhalational anthrax. In addition, the company received approval from Belgium authorities to sell its’ Trobigard auto-injector, an emergency treatment of exposure to nerve agents or toxins.

➢Sales of the company’s NARCAN nasal spray rise 46% YOY to $106.2 million and EBS anticipates a decision regarding its patent infringement lawsuit currently being argued in the US Court of Appeals before year-end 2021.

➢The company’s CDMO business ends the June quarter with new business of $53 million, contract backlog of $1.1 billion and an opportunity pipeline of $672 million. New business was offset by $108 million of negative contract modifications mainly related to winding down work on the AstraZeneca COVID vaccine at Bayview.

We updated our revenue and adjusted EPS estimates to reflect June quarter results and guidance and reiterate our BUY rating and blockedblockedblockedblockedblockedblockedblocked

 

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Olympic Steel Inc: The Early Stages Of A Winner

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Olympic Steel Inc: The Early Stages Of A Winner

Olympic Steel is a leading U.S. metals service center focused on the direct sale and distribution of large volumes of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel, aluminum, tin, pipe, and tubular products.

 

July 19, 2021

Price (as of close on July 16, 2021)

$28.54

 

Rating

Buy Long-Term

 

Price Target

blocked

 

Olympic Steel Inc. (ZEUS)

Q1:21 earnings were strong from improving market conditions. Strong demand and limited supply have caused metal prices to rise, and the trend is likely to continue for the remainder of the year. We increase our target price  blockedblockedblocked and maintain our rating at Buy Long-Term.

 

olympic steel inc the early stages of a winner

 

Q1:21 Highlights

Q1:21 revenues were $463.1 million, up ~30.7% from Q1:20 due to higher pricing (+32.1% YOY).

➢ All three segments - Carbon Flat (+21.4% YOY), Special Metals Flat (+42.8% YOY), and Tubular & Pipe Products (+43.7% YOY) reported higher sales.

➢ Operating income was $31.5 million in Q1:21 versus operating income of $3.0 million in Q1:20. We note that there was LIFO income of ~$1.0 million in Q1:21.

➢ Adjusted EBITDA was $37.8 million in Q1:21 versus $7.4 million in Q1:20. All three segments delivered positive EBITDA for the quarter.

➢ Excluding LIFO income, adjusted EPS was $1.97 in Q1:21 compared to $0.02 in Q1:20.

➢ Management expects favorable market conditions to continue for the rest of the year.

➢ We adjust our estimates for 2021. We maintain our rating at Buy Long-Term and increase our target price to blockedblockedblockedblockedblocked.

 

PRIMARY RISKS

➢ The Company’s sales and earnings are highly dependent on steel prices and any decline in prices could negatively affect operating results.

➢ The Company faces risks stemming from a heightened U.S.-China trade war. Any further escalation could weaken results.

 

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Kirklands Inc: Management Continues To Deliver Their Promises

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Kirklands Inc: Management Continues To Deliver Their Promises

 

June 28, 2021

Price (as of close on June 25, 2021)

$22.82

 

Rating

BUY

 

Price Target 

blocked

 

Kirkland’s Inc. (KIRK)

Kirkland’s Inc. (KIRK) The company announced strong Q1:21 results, delivering its most profitable Q1 in over five years. Management guided for margin improvement in the near to medium term, which should boost profitability. We decrease our target price to blocked and maintain our rating at Buy.

kirk content

 

Q1:21 Highlights

Q1:21 revenues were $123.6 million up 60% from Q1:21. For Q1, comparable sales i ncreased 75.3% YOY while e-commerce comparable sales increased 42% YOY.

➢ E-commerce accounted for 30% of overall Q1:21 sales versus 24% i n the p revious q uarter (Q4:20).

➢ Gross profit for Q1:21 was $40.2 million, up 293% compared to $10.2 million i n Q1:20. Gross margin increased 1,930 bps YOY to 32.6% in Q1:21.

➢ EBITDA was $7.7 million or 6.2% of sales compared to a loss of $17.1 million in the prior year.

➢ Adjusted net income at $1.8 million in Q1:21 or $0.12 per diluted share versus an adjusted n et loss of $17.7 million or $(1.27) per diluted share in Q1:20.

➢ We adjust our estimates based on the quarter end results and management’s commentary. W e decrease our target price to blockedblockedblockedblocked. We maintain our rating at Buy.

 

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