I don’t own Naturally Splendid (NSP.V) stock for the same reason I don’t hold much Golden Leaf (GLH.C): Sometimes the market is just too stupid when it comes to certain stocks, to the point where, even if you like them, sometimes it’s prudent to just stay away for a while.
NSP emerged in 2014 as an unwitting member of the Great Weed Diaspora, where Canadian public companies ran amok trying to be the next big weed company.
I say ‘unwitting’, because NSP was dealing in hemp, and had been for some time. They weren’t one of the fly by night outfits jumping in without a business plan, they’d developed their Natera brand of Hemp Omega protein powders and hemp seeds over several years, which they’d managed to get onto some supermarket shelves. At that time, the stock was holding at around $0.24.
From there, it would rise and fall, rise and fall, for most of the year, regardless of what their news was.
Then came the Great Spike of 2015, where the company appeared ready to get into the B2B Hemp Omega game. A big former government agency signed on as a fulfillment partner. Cannabis options were discussed – we were going to see the Hemp Omega on breakfast cereals and breads and… then the deal got complex.
That government agency had a facility that could be got on the cheap, but maybe they were merging but probably they weren’t and money was raised and nobody really got what the money was for and facility deals take time to monetize and the sales contracts don’t come overnight and…. from $1 back down to $0.20. Then back to $0.40 on news, then back to $0.20.
Then back to $0.40 on news! Then back to $0.20.
Weak hands galore. Daytraders in and out. Shorters having their way.
NSP, sadly, has just been one of those stocks where no matter what they do, the public perception is one that it doesn’t have the balls for a new base, which becomes a self-fulfilling prophecy.
Consider this: The company made a big hemp sale to South Korea. I busted that information out earlier this year, that a big hemp order was coming and that de-hullers were working around the clock, and that it only made sense for that order to be NSP’s. And I was right.
A million-dollar bulk order, fueled by a new home shopping channel craze out there for all things hemp.
And the stock duly jumped. And then it came back.
Just yesterday, NSP was jumping again when news emerged that the $1m order had quickly become a $3m order, and would likely increase again. Up jumped the stock, from $0.24 to $0.33, a huge day that should be celebrated by all.
And today? In early trading, it’s back down to $0.29. Dumb market keeps being dumb as weak hands take small wins.
If you look at it from another perspective, the facility deal is completed, the Natera product is selling just bananas well, the company now has B2B deals with Laguna Blends (LAG.C) and others, revenues are jumping, risk is being removed, they’ve got an online bulk hemp sales unit now, and a hemp dog treats line that comparables such as True Leaf (MJ.C) have taken to a $6m valuation… and you can buy NSP stock today for what you could buy it for way back at the start, when Natera was on a couple of IGA shelves and that was it?
That’s madness.
NSP is a totally undervalued play right now, but it won’t get revalued until something new comes about to really shake things up. And maybe even then. Sometimes you just need to do something explosive to shake off the market shackles. Something bigger than a $3m sale to South Korea, apparently.
If I was buying for my RRSP, and didn’t give a shit about the day to day ups and downs, NSP is a lock, because that crew are doing what they promised, and have delivered exactly what they’d hoped for.
If you’re buying short term however, maybe stick around for a couple more days and watch it slide back to $0.24, then eat it up and wait for the next press release, and dump it once more for a profit, thereby sending it back down. Rinse, repeat.
Like everyone else seems to be doing.
Or maybe, just maybe, hold it this time. Weird concept, but maybe let momentum build. Let the company keep delivering, let financials pop, and buy more along the way. Maybe, if you treat this company like the actual company it has demonstrated it is, over and over, that dumb market stigma can slip off and this thing will be bananas again.
Maybe if all the mouthbreathers and knuckleheads quit taking their 5% profits and actually got stuck in behind the company, this thing could get to where it should be, which is closer to $0.80.
It will get there. Some day soon.
–Chris Parry
http://www.twitter.com/chrisparry