Ammunition shortages continue nationwide. Thus, investing in companies that produce and sell these products may present a compelling proposition. Small-cap
That's especially true after AMMO raised its FYQ2 guidance to
Moreover, AMMO is targeting a market expected to stay exceptionally strong throughout 2022. In fact, AMMO appears to be selling products as fast as they can make them. Better still, don't expect demand to slow down. On the contrary, its transformative
It's also fair to suggest that AMMO is in hyper-growth mode.
Guidance Estimates 400% Revenue Increase
After all, hitting its
Know this, too. Momentum is at the company's back after it published record-breaking growth last year. In its year-end report, AMMO posted a 409% increase in comparative revenues, increased gross profit margins by 179%, cut operating expenses as a percentage of sales by 58%, and booked a 296% increase in EBITDA to
And suppose that isn't enough to inspire interest. In that case, AMMO's FYQ2 guidance follows its potentially record-setting momentum from its first quarter that ended in June, which, as noted, will be reported next week. Thus, whether evaluating AMMO by referencing year-over-year or sequential results, AMMO makes a case for buying its stock at these levels.
Other factors make its case more compelling.
FY2Q Guidance Follows An Expected Record-Setting Performance
Foremost, despite its phenomenal growth over the past 12 months, investors are yet to see the full impact from its
Moreover, expect Gunbroker to be only a part of the bullish proposition. AMMO also expects to benefit from near-unprecedented US demand for ammunition, showing no signs of slowing down. In fact, thus far, in 2021, gun permit applications are soaring to near all-time highs, and the political rhetoric is adding fuel to the frenzy, driving consumers to the markets at a record pace.
Of course, that's excellent news for AMMO as it targets the retail consumer business. Gun owners need ammunition. And for those that think the Gunbroker opportunity is already priced in, think again.
According to AMMO, ammunition sales to Gunbroker.com's roughly six million active users accounted for only about 3% of its revenues. Hence, it's proper to assume AMMO is staring down the barrel of immense opportunity. Consider this. Selling products to even 15% of that base with a
And that makes its
Big-Ticket Markets Deliver Big Ticket Opportunities
Frankly, at this stage, it makes little sense for AMMO stock to be trading at anything less than its established highs. This year alone, AMMO expects to deliver upwards of 750 million rounds of ammunition to a diverse list of customers. And that guidance hasn't fully factored in the enormous potential from its Gunbroker.com active user base. It does, however, at least include the expected impact from its massive brick-and-mortar presence.
There, AMMO expects to capitalize on revenue-generating opportunities from having products available in more than 1600 retail locations. And with its soon completed manufacturing facility expected to triple its production capacity, its already impressive market presence is likely to grow.
Moreover, through its multi-channel distribution network, AMMO can leverage its enhanced capabilities to target a more than
Also expounding on the value proposition, the ammunition shortages give investors months-long visibility. Keep in mind, AMMO is already serving a backlog for ammunition that increased by 125% in less than six months. Hence, assuming the surge in demand continues, which is expected, once AMMO fills those orders, expect them to get replenished. Not just from online sources, either. Recent marketing and operational initiatives connected AMMO with more than 67,000 dealers, added over 1,000 new customers and processed over
And on the retail brick and mortar side, AMMO maximizes placement opportunities with major national brands, including
Hence, it's difficult to justify the recent weakness other than to say it's related to investors' perception that pandemic headwinds may still affect the sales channels. That pessimism, though, may be overstated in AMMO's stock price.
A Surge Ahead
Base that conclusion on another factor, too. Its share-price-to- revenues multiple is absurdly low at current levels. Admittedly, no stock goes straight up. And with AMMO shares higher by about 128% year-to-date, those investors that have been in the stock for more than seven months probably aren't complaining.
Still, when good stocks get taken lower indiscriminately, investors take notice. In AMMO's case, taking note also helps expose a compelling investment opportunity. Investors only need to look at the data. AMMO executes on all cylinders, creating value in consumer, military, law enforcement, and wholesale markets. They also have cash and a respectable capital structure to capitalize on new opportunities as they arise.
Then factor in record-setting revenues and positive EPS, the firepower available to this company is nothing short of tremendous. Best of all, AMMO is telling its story, raising guidance, increasing production capacity, and expanding its sales opportunities into new markets. To anyone finding cause to not like AMMO at these levels, the advice is simple. Check your notes.
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The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be forward looking statements. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as projects, foresee, expects, will, anticipates, estimates, believes, understands, or that by statements indicating certain actions & quote; may, could, or might occur. Understand there is no guarantee past performance will be indicative of future results.Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investors investment may be lost or impaired due to the speculative nature of the companies profiled.
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