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ISW Holdings Inc (OTCMKTS:ISWH) is on the radar right now as an oversold and potentially very interesting deep-value play on the coronavirus hospital emergency. The company is an emerging leader in the home healthcare space, which amounts to a safety valve alternative healthcare system as hospitals become increasingly overwhelmed with new patients suffering from COVID-19.

That trend has boosted the company’s performance, as evidenced by its recent release following the publication of its 2019 financial statements.

ISW Holdings Inc (OTCMKTS:ISWH) bills itself as a global brand management holdings company with diverse operational interests, including commercial-stage operations in the spirits, CBD, and home healthcare markets, and development-stage operations in the logistics and supply chain and renewable energy markets. But the source of the company’s strong data is firmly centered in its home healthcare operations.

According to the release, “for the year ended December 31, 2019, ISW Holdings posted revenues of $527,151. Management notes that these results were achieved on accelerating sequential quarterly growth, with nearly half of those revenues appearing in Q4. Sequential growth in Q3 (versus Q2) was 26%. Sequential growth in Q4 (versus Q3) was 29%. The Company projects Sequential growth in Q1 2020 to come in at a new record level significantly outpacing Q4 2019 results.”

The company goes on to note that it also “believes this growth curve may further steepen in Q2 2020 given projections released by the White House this week and the strong relationship between expanding healthcare needs related to the COVID-19 outbreak and overflow demand for non-traditional healthcare solutions such as those offered by ISW.”

That’s a rather dramatic set of statements. The total revenue run rate right now is small compared to big caps out there, but the curve is what we are calling attention to: accelerating sequential quarterly growth is rare and usually stokes excitement in the market at some point. If the projections are right, then Q2 will be the fifth consecutive quarter of increasing sequential growth.

Extrapolating the Story

Just to make the point more clearly, imagine where that would lead if it continues for the next five quarters as well.

At its present second-derivative rate, we would be looking at over $2M in sales for Q2 2021, and an annual top-line of over $5M for 2021 overall. It would also suggest that the stock will be trading at less than 0.5x forward sales if it is still sitting at $0.20/share in June.

That’s a rare price-to-sales discount for companies showing slow or no growth. But it’s impossible to sustain in the market for a company growing sales this fast.

In closing, we think this quote from management says it all:

“We are all in this together,” commented Alonzo Pierce, President of ISW Holdings. “As far as performance, we hope current and prospective shareholders understand that we are expanding to catch up with an accelerating flood of demand in our home healthcare segment. We are on pace for easily our best year in Company history. We are also on the verge of an announcement that will qualitatively bolster that trajectory, and we will have more details on that very soon.”

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