SA Transcripts • Mon, Nov. 17
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MusclePharm Corp.: An Undiscovered Growth Story With Over 80% Upside
- MusclePharm is substantially undervalued, trading at 29x this year's expected earnings, 23x my 2015 earnings estimates and 5.8x my 2016 earnings estimates.
- Expected to enter the large and fast growing sports and energy drink markets in late 2014, early 2015.
- Gross margin growth and guidance are unappreciated; MusclePharm could achieve 40-45% gross margins over the next few years, while 1H 2014 was ahead of guidance at 34.6% vs guidance of 33%.
- Sports supplement industry has consolidated heavily over the past six years; with Post Holdings and Glanbia PLC making multiple acquisitions, MusclePharm is a potential takeover target.
- Recent insider buying by six different executives along with share repurchases totaling 250,000 shares and a new revolving credit facility for up to $8 million demonstrate change in management philosophy.
- MusclePharm bought back 250,000 shares of its own stock.
- This has implications for my existing thesis that MusclePharm is evolving from a dilutive company to one that cares about dilution.
- In two different ways, this confirms MusclePharm's positive prospects going forward.
- MusclePharm's long thesis requires continued growth.
- This growth is supported by new products and expanded distribution.
- Today's news fits squarely into the growth thesis, by bringing expanded distribution of two products that fit particularly well with Wal-Mart's clientele.
Update: Recent Developments Keep MusclePharm Thesis On Track
- Developments at MusclePharm continue to reinforce the original thesis.
- There are further clues that the company has abandoned its dilutive ways.
- The company is also launching new products which should be enough to keep growth alive.
MusclePharm Corp.: Successful Despite Management's Best Efforts
- MusclePharm has once again shown impressive growth for sales, profit, and income.
- When looking at past quarters, it is evident the company was run by amateurs with connections in the sports industry.
- The growth of the company comes because of the great product lineup and connections in the sporting industry, not because of the great business acumen of the leadership.
- In previous comparisons, I compared MusclePharm to the growth stocks of today.
- This time, I compare it to a directly comparable company, but ten years ago.
- The result shows how MusclePharm is tracking the Monster Beverage story, and how if it manages to keep tracking that story its share price will explode upwards tremendously.
Update: MusclePharm Insider Buying Reinforces Thesis
- Insider selling, or even buying, most time means little.
- However here it's synergistic with my previous thesis.
- The thesis is thus reinforced by the insider buying taking place in the last few days.
MusclePharm Is Clearly On Track, Has Massive Potential
- Most recent guidance shows MusclePharm is clearly on track.
- Yet, the discount to other growth names seems to massive that one needs to look at the reasons for such being so.
- The main reason is that MusclePharm still looks like the former penny stock insider-dealing dilutive company it once seemed to be.
- A closer look at the reasons for MusclePharm looking that way reveals that a transition took place, and the red flags we identify are actually signs of a bright future.
- Given how fast MusclePharm is growing, and how profitable such growth will become, it's likely that MusclePharm has multi-bag upside potential as soon as the market recognizes the transition.
An Undiscovered Brand With Improving Margins And Strong Growth
- MusclePharm has successfully built customer-facing brands.
- In doing so, it has entered into a massive growth trajectory, which recently turned profitable.
- Still, the stock doesn't yet trade at growth multiples, given a checkered past.
- I'd expect there to be at least 50-100% upside on a growth re-rating or acquisition interest alone. And possibly much more if the growth trajectory stays intact.
MusclePharm: 5 Reasons Why Shares Remain Undervalued For Long-Term Investors
- New Deal with Tiger Woods could Accelerate Launch of Dropz energy drink brand.
- FitMiss continues to see retail expansion and gains valuable endorsee in Jen Setler.
- Company trades at less than 1x sales and 11x expected forward earnings per share.
MusclePharm: Substantially Undervalued And Strong Acquisition Target
- MusclePharm’s growth continues to exceed expectations; new product launches will drive future growth.
- The stock is trading at a 100% discount to fair value; uplisting to NASDAQ is a near-term catalyst.
- The company is a strong acquisition target due to industry consolidation, could fetch over $300 million.
- Investors and analysts have been critical of excessive dilution and executive compensation.
- The company has grown sales to $110 million, a valuation of .6X sales.
- Once the company is listed on the NASDAQ investors can expect to see the price take off.
MusclePharm: After Strong Q4 2013, Shares Continue To Be Undervalued, Activist Hedge Fund Acquires 11% Stake
- MSLP's strong 4Q13 growth in net sales shows new product launches and distribution deals are gaining traction. Margin compression likely to be temporary as BioZone acquisition is being integrated.
- Activist hedge fund Wynnefield Capital buys 11% stake at $8.29 average per share. Has been previously vocal about common shareholder dilution at MusclePharm.
- Taking a closer look at 4Q13, 2014 guidance seems conservative.
- Shares continue to be undervalued trading under $7 with a near-term price target of $12.
Upcoming Catalysts May Move MusclePharm Stock Higher
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MSLP vs. ETF Alternatives
Headquartered in Denver, Colorado, MusclePharm is a rapidly expanding healthy life-style company that develops and manufactures a full line of NSF and scientifically approved nutritional supplements that are 100% free of any banned substances. Based on years of research, MusclePharm products are... More
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