One stock that has been on the run in recent weeks is Clikia Corp (OTCMKTS:CLKA). The strong action follows news that it acquired what we should consider its subsidiary for now – though this is clearly the one and only business the company has – Maison Luxe, which is a dealer in ultra-high-end luxury goods like $50k watches and jewelry with a story behind it. The company plans on moving into other super-luxury goods categories – think gowns, exotic cars, maybe fur coats, etc. The general theme here is stuff you and I will probably never be able to afford.

But, here’s the thing: the number of ten-millionaires is rising faster than ever before over recent years. The same can be said about billionaires. Much of this is due to the rise of China as a global economic force now on par with the EU and US. That has unlocked vast productivity and stores of wealth, and we have seen the traditional process of winner-take-all aggregation dynamics do the rest of the work.

The end result is a boom for companies like Maison Luxe.

Now, as we see from the company’s revelations earlier this morning, that boom is paying off well for CLKA shareholders. While the numbers aren’t huge, it must come as a positive shock to see the company pulled in nearly $1.4 million in sales in Q1 alone – a pace heading it for possibly $5-7 million this year. This is well above anything that could have been even conceived for CLKA coming into 2020, and even well above what the company has hinted at in its communications.

And, if there’s one thing we find most correlated with strong success over time for a stock, it’s this exact quality: underpromising and overdelivering. It’s the difference between AAPL and MJNA – well, hardly the only difference. But, hopefully, you get the point.

We would also note that the company has assets coming together, including an apparent strong accounts receivable and a strategic inventory.

The Future is Golden

Maison Luxe is an interesting prospect precisely because it may offer investors a way to gain access to a market that seems somewhat immune to economic cyclicality. In addition, following the company’s recent release outlining plans to augment its strategic inventory, shares in CLKA may become a sort of precious metals substitute as a store of value because you are effectively buying a piece of that inventory – an inventory of extremely expensive watches and jewelry that have at least 50 years of data showing they appreciate over time.

That combination suggests CLKA is an interesting asset from a portfolio theory standpoint. And the growth is evident from this morning’s results.

Anil Idnani, Clikia CEO and Founder of Maison Luxe, commented, “Q1 trends were strong. And we see continued strong growth ahead during the second half of the year. As recently announced, we are gaining traction with duty-free distributors and improving our market positioning and asset productivity with the establishment of a larger strategic inventory. We are also working on expansion through product category and geographic steps, and we look forward to providing further details on those themes in coming communications.”

Growth and Competence

The stock has been rallying in response to the move into this space, and apparently for good reason. Under its prior guise, Clikia was producing nothing tangible for shareholders. Since shifting to the Maison Luxe business, we are already seeing a pace for the better part of $10M in annualized sales.

With its move to widen its relationships with duty-free sellers, we would anticipate an improving trend from these levels. However, reporting time boundaries and the obvious importance for results for each sale could add some occasional volatility to results – ie, because each item is so expensive, this is like chunky peanut butter in its results. Something that sells a billion $1 items is creamy peanut butter by comparison. But they still get to the same place if they have an edge, which apparently is the case here.

That edge seems to derive from the company’s founder and CEO, Anil Idnani. In a recent shareholder letter, Mr. Idnani noted that he and his family have a well-established position in the ultra-high-end luxury goods market. Again, we aren’t talking about a Gucci purse or a $500 watch, but purchases you can only make with the right relationships.

And Mr. Idnani has those relationships already in place. That comprises an “edge” for the company likely even more important than its interesting niche-level context positives or its function as a rare-goods portfolio hedge.

So far, it’s paying off in a manner that far exceeds market expectations, which could play in the stock’s favor in reaction.