The world is reopening! Vaccine-induced herd immunity, better testing systems, the end of the cold & flu season in the northern hemisphere, and the gradual evolution of the virus toward favoring transmissibility over virulence are all contributing to the widespread sense that the world is about to move out of the “pandemic crisis” and into the “post-pandemic normalization”.
That is obviously great news for everyone. But, in the stock market, it’s particularly great news for certain stocks, and less so for others. It is particularly exceptional news for anything related to the travel and leisure marketplace.
One speculative stock burning up the charts over recent weeks that provides a good example is Victory Marine Holdings Ord Shs (OTCMKTS:VMHG), a recreational marine craft player with a recent spate of powerful catalysts that look to be setting the company up for tangible success over coming months.
Ducks in Order
One of the biggest catalysts in play for Victory Marine Holdings Ord Shs (OTCMKTS:VMHG) right now is simply the stock’s rebirth over the past month as a publicly live entity. Before its shareholder update in early February, the company had been radio-silent for more than a year and didn’t have current status with the OTC.
But now, suddenly, out of the ashes, according to recent company communications, it appears the filings to update its status to current are forthcoming over the near term and it has a number of potentially very lucrative deals coalescing.
We would also point this statement out from the company’s communications several days ago: “as of last week we retained a new counsel, and they are going through the previous filing to be able to issue the Opinion Letter to get OTCPink status. We anticipate having everything ready by next week.”
Context is Key
Another major tailwind for Victory Marine Holdings Ord Shs (OTCMKTS:VMHG) is a surprisingly strong context for marine products.
- For example, retail unit sales of new powerboats in the U.S. increased in 2020 by 12 percent compared to 2019, surpassing pre-pandemic expectations of a two percent increase.
- Annual U.S. sales of boats, marine products and services are estimated to total $47 billion in 2020, up 9% from 2019.
- With the retail price of a new aluminum boat package (includes trailer, engine & other accessories) averaging $36,000 and new personal watercraft averaging $13,000, there’s opportunity for boating to attract more participants as families look for responsible ways to distance and get on the water near home.
- An estimated 100 million Americans go boating each year.
- The recreational boating industry supports 691,149 American jobs (511,117 direct jobs and 180,032 indirect jobs) and 35,277 American businesses.
- Outdoor recreation makes up 2.1% of U.S. GDP, generating $788 billion in real gross output and supporting 5.2 million jobs. Source – U.S. Bureau of Economic Analysis (BEA)
- Boating and fishing are the largest outdoor recreation activities in the U.S., totaling $23.6 billion in current-dollar value added. Source – BEA
- Outdoor Recreation is 3.3% of U.S. employment. In comparison, hospitals make up 3.3%, educational services 2.4%, real estate 1.5%, and agriculture 0.9% of U.S. employment. Source – BEA
But, even more importantly, as travel and leisure picks back up after the pandemic, all of these core trends are likely to become an even stronger tailwind for VMHG.
Deal-making on the Rise
Along with getting filings in order and getting current, Victory Marine Holdings Ord Shs (OTCMKTS:VMHG) has also started to make deals to set the stage for tangible results ahead.
For starters, the company recently announced its recent strategic alliance with premium boatbuilder Chaparral and Robalo Boats, a wholly owned subsidiary of Marine Products Corporation (MPX).
“It has been a remarkable time for us,” says Orlando Hernandez of Victory Marine Holdings. “It was impossible not to be affected by the global tragedy unfolding before us daily. Yet, with dedicated focus and determination, we are now positioned to take full advantage of the coming economic resurgence.”
That key announcement was followed by potentially even bigger news in the form of the company’s announcement of the formation of its new wholly-owned government military subsidiary, Stealth Marine, and its deal with ArmaCraft to distribute High-Speed Diver Delivery Crafts, High Speed Interceptors and Reconnaissance vessels.
According to its release, ArmaCraft is a developer and builder of composite patrol vessels with market leading performance capabilities. Its new generation Trident program, ArmaCraft’s most efficient and versatile submersible high-speed diver delivery crafts to date, is scheduled to begin sea trials in 2021, with market delivery expected in early 2022.
We suspect other significant catalysts may be on the way given this little note in a recent corporate update from the company: “We have been contacted by several viable companies within the marine industry interested in discussing merger or acquisition possibilities. As is our custom, any potential partners are thoroughly vetted and reviewed to determine an appropriate level of interest and potential opportunity.”
Hence, the company has a context defined by a strong and improving set of macro tailwinds, it is nearing current status and clean bill of health with OTC, and the deals are starting to pile up ahead of its seasonally strongest period of the year.
That may help to explain why the stock is ripping higher over recent weeks and may deserve a closer look.
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