There is an interesting story brewing in the sub-penny ranks right now. International Spirits & Wellness Holdings, Inc. (OTCMKTS: ISWH), a company that specializes in premium tequila, home healthcare, and CBD-based wellness products, just put out wordthat it was heading for its first ever EBITDA profitable quarter in Q3 of this year – when the quarter ends on September 30.
This news followed tightly on the heels of the company’s pronouncement that it saw revenues grow by 6,400% in the prior quarter – ending June 30.
According to company communications, the x-factor here has been its success in the home health care space, where it has been significant strides toward growth and profitability – strides that are now coming to fruition in Q3.
The Bigger Story
But there’s a bigger story lurking under the surface of this evolving turnaround narrative: the company’s branded CBD-based product segment has been largely on hold in recent months following a strong growth trend put into place during Q4 2018 and Q1 2019. The reason this stock is really worth a look is that the company just announced the CBD business is ready to ramp back up after some reconfiguring of its supply chain and its key strategic partnership with BioPulse Labs, one of the foremost players in the CBD nano-infusion technology space. BioPulse is also critical to ISWH’s marketing and distribution strategy for its P19 CBD line.
So, news that the partnership and process is now fully coming back online opens up a very different level of growth potential as we look ahead to how this story might further evolve from now until year end.
Simply put, this is a monumental turnaround story in terms of tangible financial performance. The growth on the top-line is in place. The EBITDA profitability is now in place as well. And now, it looks an awful lot like we are about to see the extra growth engine of multi-segment performance start to kick into gear as CBD sales ramp back up.
To give you some sense of how this could impact the picture, if we look back to the company’s projections posted in January, which included the CBD segment working at full volume, the sales estimates and guidance would add up to at least a 100% jump in revenues next quarter, and possibly much more. If that is coming in the context of EBITDA profitability, then this would not at all suggest the current pricing of shares is even remotely reasonable.
Advantageous
Nothing in life or markets is guaranteed at all, but we would tend to agree with ISWH CEO Terry Williams when he quipped, “This is a rare marketplace. New research calls for a CAGR in the CBD-based products space of 107% for the next 4 years. That’s just staggering. I’m not sure I’ve ever seen anything like it. This whole marketplace is being sucked up into a massive black hole of demand as CBD finally really hits the radar of the mainstream public. We have inventory and branding already in place for a market-leading product line, and we have marketing and distribution ready to come back online into quarter end. That puts the Company in an especially advantageous position right now.”
That quote references some massive growth forecasts in the CBD space looking ahead for the rest of this year and over coming quarters.
As noted in the company’s release, Brightfield Group, a leading market and consumer intelligence firm for the legal CBD and cannabis industries, recently increased its own growth forecast for the CBD market, published analysis calling for a 706% year-over-year CBD product sales jump in the US in 2019 to around $5 billion in total sales, with sales expected to reach $23.7 billion by 2023.
