Good Morning Traders!
New Trade Alert: NightFood Holdings Inc. (OTCMKTS: NGTF)
It’s time to kick off the Fall trading season now that folks are back from vacation and Wall Street is past the Labor Day weekend and fully back in gear. We see a number of interesting opportunities in our pipeline, with already over 2,000% in total available gains in 2017.
Our first pick of this new stretch is a very small float stock (just over 4M shares) that recently uplisted off the pink sheets and onto the OTCQB. The technical setup here is a ripe RSI bullish divergence on a double-bottom bounce setup in a stock seeing clearly rising average trading volume.
However, much more importantly, the company is reporting strong sales momentum. And that’s the real story here: this is turning into a top-line growth play, and we think the market may be about to start figuring that out and pricing things accordingly. This one could be big!
NightFood Holdings, Inc. (OTCMKTS: NGTF) manufactures, markets, and distributes snack products for evening consumption in the United States. It provides nutrition bars for supermarkets, grocery stores, and nutrition stores.
That positions this company squarely as an emerging leader in the healthy-ingredient snack market.
This is a strong market segment showing a lot of growth at present. In fact, a recent report on the snack food market from “Packaged Facts” showed that the last five years have seen steady growth for the healthy-ingredient snack market, with much stronger growth in the last two years due to double-digit growth in the meat snack and trail mix categories in 2014, and even stronger growth in snack bars in 2015.
The report estimates that market growth will rise slightly above 5% in 2016, with sales for the category, as defined by Packaged Facts, growing to $20.3 billion. “The following years will see a slow but steady increase in sales growth, culminating in healthy-ingredient snack sales of $25.4 billion in 2020, a CAGR between 2016 and 2020 of 5.7%,” the report said.
NGTF has developed a product just for a special niche: Food designed to satisfy that nighttime snack craving, but also to promote health and sound sleep.
As we discussed above, we think this is turning into a top-line sales growth story. On the OTC, that’s a special kind of opportunity that can garner premium valuations on the market because it’s the most tangible kind of story. Most folks can understand it as an investment opportunity. In short, it resonates with investors.
In this case, the company just announced an increase in product sales of 52% from July to August according to Amazon reports. Monthly income (where Amazon accounts for items such as sales promotions and refunds) increased 78% month to month. As you may recall, the company just started booking sales on Amazon this Summer. In a recent update, management noted that was starting to see week-over-week increases in Amazon sales and metrics.
Now, we are getting more tangible proof of that growth. Keep in mind that a 52% jump in a month is an annualized CAGR of something like 9,900% (if each month sales jump 52% on a sequential basis, then the 12th month in that series would exhibit sales 9,900% greater than the first month).
“Campaigns like this become profitable as you decrease your customer acquisition costs, build your customer base, and repurchase behavior starts to kick in from satisfied snackers,” explained NightFood CEO Sean Folkson. “Our goal is not just to have a profitable campaign, but to be profitable at scale. I think we’re on our way.”
Another key to the story – a major reason we think this may be such an interesting opportunity right now – is the company’s recent press release directly noting that it was starting to step up investor relations. When you have a good story, you have a responsibility to current shareholders to get that message out there to other prospective investors. So, it’s definitely good to see the company taking that step.
In addition, in that release, the company notes that “No Company insiders or Affiliates have sold, or otherwise disposed of or reallocated, any shares of NightFood stock since November, 2015, when Company CEO Sean Folkson used stock equal to less than one half of one percent of his holdings to pay for certain services.”
So, as one might expect given the sales trends, the core shareholders remain committed, which means upward momentum isn’t going to run into a wall of opportunism on the inside offer of the share market. With a float of just 4.3M shares, that’s what we want to see: open field above. That could really open up a huge squeeze here.
Overall, the chart here is generally promising for at least a bounce, but potentially a whole lot more. The double bottom pattern shown on the chart above should be pretty clear. But this one has a very strong RSI bullish divergence in place that increases the odds of some kind of potential pop. The tiny trading float suggests that move could be a real runner.
Long story short: don’t fall asleep on this one tomorrow morning. It’s time to get back to work!
NGTF (NightFood Holdings, Inc.) is a company that, through its subsidiary, NightFood, manufactures, markets, and distributes snack products for evening consumption in the United States.
NGTF provides nutrition bars for supermarkets, grocery stores, and nutrition stores.
NGTF was founded in 2010 and is based in Tarrytown, New York.
What You Need To Know:
- NGTF has a small trading float of just 4.3M shares, which suggests the stock could launch higher on any additional influx of interest.
- NGTF recently uplisted onto the OTCQB, off the Pink Sheets.
- NGTF is positioning itself as an emerging leader in the “healthy-ingredient snack” market, which is heading for total sales over $25 billion.
- NGTF is coming off a double-bottom pattern with a strong RSI bullish divergence in play.
- NGTF just reported a huge month of sequential sales growth that could put this company on pace for nearly 10,000% top-line growth over the next 12 months.
For all of these reasons, we are now pounding the table on NGTF. Good luck and Enjoy the Ride!
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