Puration Inc. (OTC: PURA) shares have joined the micro-cap bull market. Since the start of 2021, PURA shares are higher by 99%, boosted by a series of announcements that position the company to accelerate growth in the current and coming quarters. Strong revenues, its exclusive license to a patented cannabis extraction process, and a recent capital investment into Alkame Holdings, Inc. (OTC: ALKM) contribute to what could be a breakout year for the company.
The bullish sentiment started to take root at the end of January when PURA announced that sales of its EVERx CBD Sports Water product are expected to again eclipse $2 million in sales in 2020, following impressive growth in 2019. By the end of Q3 2020, sales had already reached $1.9 million despite the consumer and wholesale market disruptions caused by the ongoing COVID-19 pandemic. Fast-forward to 2021 and PURA expects to continue and even accelerate EVERx CBD Sports Water sales growth. The good news for investors is that that revenue-generating asset is just one part of a growing portfolio of products and interests that PURA plans to exploit this year.
PURA is also expecting to extend its market reach by capitalizing on the inherent value of its exclusive license to a novel cannabis extraction process. That patented asset, issued by NCM Biotech, allows PURA to aggressively penetrate new billion-dollar-market opportunities by leveraging an extraction technology that could blaze new trails into the massive CBD beverages, edibles, and cosmetics markets. PURA is also positioned to benefit from having access to continued research by NCM Biotech to extend product reach into medical-use CBD products. That market, as investors have come to know, can be worth billions.
Now, with a recently announced 5% stake into Alkame Holdings, Inc., the opportunities at PURA have increased substantially. And that could be why investors are bidding up the stock.
Investing Into Massive CBD Market Opportunities
Last week, PURA announced that it has taken a 5% stake in Alkame Holdings, Inc., the Texas-based company that currently bottles its EVERx CBD Sports Water. Beyond providing potential cost savings to PURA from bottling and logistics services, the deal puts both companies in an excellent position to benefit from each other’s business expertise.
Specifically, the partnership intends to pilot the production of multiple new CBD infused consumer products, including a plan to produce and test market a CBD infused liquid sugar and a CBD infused pet food supplement. Incidentally, ALKM shares were higher by 27% after the news of the investment was published, adding balance sheet value to PURA. The surge in price also reflects confidence in the ability of both companies to maximize combined opportunities.
Keep in mind, too, PURA is not a rookie in the CBD-infused beverage space. The company’s flagship product, EVERx, was introduced in 2017 to target the sports nutrition market. Sales of the specialty water have continued to impress, and as noted, PURA expects to deliver back to back revenue growth exceeding $2 million in 2019 and 2020. Applying a peer-based revenues multiple on that number alone justifies a substantially higher valuation.
Moreover, as the economy edges out of consumers’ logistical restrictions due to COVID-19, the company expects revenue growth to continue in the new year. That guidance makes sense, especially with a Biden administration that may favor eliminating many federal restrictions in the cannabis space. Expectations that his administration will ease current banking regulations and allow states to assume more regulatory oversight are bullish for the entire sector.
In fact, those moves could help accelerate PURA’s plans to introduce new beverages, capitalize on current investments, and grow its product portfolio through targeted acquisitions. Still in the works, too, is the expected dividend from the company’s spun-off cannabis cultivation segment that positioned PURA to focus exclusively on its high-growth core CBD-infused beverage business. Terms of that spin-off will benefit shareholders through a stock dividend by Nouveau Life Pharmaceuticals (OTC: NOUV). Regulatory filings to effectuate that dividend have been ongoing, and the distribution is expected soon.
Additional PURA strategic interests are likely contributing to the recent spike in share price. A deal with PAO Group, Inc. was met with investor enthusiasm.
A Sum Of The Parts Equation
In January, PURA said that value from its recent Farmersville partnership with PAO Group, Inc. (OTC: PAOG) and Alkame Holdings Inc. could spark a 2021 breakout for the company. They, too, noted that cannabis policy changes could add fuel to a sector bull market. Puration’s moves ahead of changes could provide a windfall.
PURA recently acquired property in Farmersville, Texas, as part of an enhanced strategy to build a comprehensive brand (Farmersville Brands) presence around the full potential of hemp derived products. The mission is to take advantage of the massive opportunities beyond just the CBD extract sector and to capitalize on hemp fiber markets that provide a better product alternative to traditional construction, clothing manufacturing, and paper production markets. To capitalize on those opportunities, PURA has entered into partnerships with PAOG and ALKM to produce hemp-derived, high demand consumer products. POAG brings additional value-creating opportunities to PURA.
PAOG also brings expertise as a longtime participant in the cannabis sector and is advancing initiatives to introduce CBD-derived treatments as alternatives to traditional pharmaceuticals. They believe they will soon offer a better CBD-based therapeutic to replace conventional pharmaceutical treatments, especially opioid-based drugs that can induce potentially severe secondary ramifications. PAOG strategies could also fit well within PURA’s long-term business plan.
Last year, PAOG acquired RespRx from Kali-Extracts, Inc. (OTC Pink: KALY). RespRx is a cannabis treatment under development for Chronic Obstructive Pulmonary Disorder (COPD) derived from a patented cannabis extraction method. Following that deal, PAOG announced an engagement with Veristat, Inc., to assist in advancing its proprietary Cannabidiol (CBD) extract to treat Chronic Obstructive Pulmonary Disorder (COPD). The goal is to move toward an Investigational New Drug application (IND) with the Food and Drug Administration (FDA) to get the treatment to market.
The benefits to PURA, and ALKM, for that matter, is that PAOG intends to work directly with PURA and ALKM’s co-packing operations to deliver its innovative CBD nutraceutical care solutions to patients experiencing issues associated with COPD. Thus, success in publicly-traded PAOG could have an exponential and positive effect on PURA’s long-term appreciation as well. At the very least, the relationship adds another shot-on-goal for near and long term success.
And with PURA actively evaluating strategic investments and acquisitions, the PAOG partnership has the potential to get much more extensive.
Puration Has Momentum Into 2021
Undoubtedly, the increase in share price after the first month of 2021 is encouraging. However, recent deals and the potential for new ones will likely attract even more attention. Of course, recording more than $2 million in revenues from EVERx also supports the roughly 100% gain in price this year. But, remember, PURA traded at much higher levels, and the return to those levels could be in progress.
Consider, too, that under the previous president’s administration, CBD and cannabis stocks took a beating after a meteoric rise in the years before. Now, select companies that led the bulls a few years ago are back in focus. More specifically, revenue-generating companies like PURA are earning the lion’s share of attention.
Also important to note is that PURA has positioned itself to benefit from multiple shots on goal. An investment interest in ALKM and partnership agreements with other emerging industry companies can create value that dwarfs its current $10 million market cap. Moreover, a combination of fundamental enhancements and potential short-covering could generate momentum to drive the stock appreciably higher.
One thing is for sure. The sum of PURA parts today equates to a much stronger company than it was when shares traded more than 10X higher. Markets fluctuate, and sectors go in and out of style, that’s a given. Another given, though, is that a company’s stock price eventually catches up with fundamentals.
For Puration, Inc., that effect could translate into exponential share price growth. After all, history in the stock market does have a way of repeating itself. That could be great news for puration Inc. shareholders.
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