I bought a position in FTLF (Fitlife Brands) last year at an average price of $4.50 per share. This week I added some shares at $9.20.
It is the best risk/reward in my portfolio. It is a turnaround story which to a large extent played out, but which is not reflected in the share price in my opinion.
Last quarter the company posted $1 earnings per share, the shares currently trade at $9.20.
My full write-up is available on seeking alpha.
https://seekingalpha.com/article/426...naround-impact
The company sells nutritional supplements for weight loss, sport performance etc.
Key positives:
- Cost base has been rightsized
- Return to revenue growth in offline retail channel
- Explosive growth in online sales channel (the company started to intensify their efforts for online sales ~1 year ago)
- The CEO purchased a very significant amount of shares last year and cashed out shareholders in a reverse/forward stock split at $5.70 per share.
Key negatives:
- ~80% of sales are to GNC franchisees. The number of franchisees reduced over the last couple of years due to bad performance. Continued growth in the online channel should reduce dependency on GNC.
- CEO / majority shareholder performed actions unfair to minority shareholders, he might do so again. (cash out during reverse/forward stock split at an unfair price, issuance of preferred shares last year when cash was needed at a bit too favourable conditions)
I believe that the company should be able to do more than $2 per share in earnings this year and believe that with the current momentum in the performance of the company (growth in both online and offline channel) and a new management which turned around the company the share price can easily increase to $20+ if they post one or two more good quarters.