Shares in Gourmet Provisions International Corp (OTC: GMPR) surged 31% last Friday following news that the pandemic-challenged food, restaurant, and hospitality sector is experiencing a massive resurgence in business. That news sent shares of GMPR soaring, and expectations are for that trend to continue. Why? Because as prior coverage highlighted, GMPR is accelerating several initiatives to emerge from the unprecedented crisis better positioned than ever to expedite its growth. In fact, at least three catalysts are already in play. Thus, while the 31% spike last week is impressive, it's likely only a prelude to more to come.
Keep in mind that GMPR is coming off one of its best quarters ever despite the industry challenges from COVID-19 restrictions. In fact, GMPR's $233,000 profit in the third quarter and its $675,000 high-margin Pizza Fusion deal announced in Q1 keeps momentum in place for substantial growth to continue during the back half of 2021. Even better, a potentially transformative celebrity partnership may accelerate growth faster than expected, with plans to launch a premium pancake and syrup line in the coming weeks. That deal adds to expanding its four subsidiary operations and increasing ownership and licensing opportunities with Christopher Street Products.
Now, with a combination of asset appreciation and planned product launches imminent, the recent surge in GMPR price looks to be just the starting point of more substantial near and long-term share price appreciation. Better still, they are part of the industry trend on the mend.
Sector Rebound Lifts Industry Stocks
GMPR isn't the only hospitality stock in focus. Industry giants Darden Restaurants (NYSE: DRI) and Brinker International (NYSE: EAT) are doing their share to act as leading indicators to the pace of recovery. While neither of those mega-caps posted intraday gains anywhere near GMPR's, their recent performance is a reliable barometer for how the sector is performing. And the indicators are good.
The interest should bode well for GMPR, especially with investors trying to quickly increase exposure to capitalize from what could be the sharpest snapback rally in food and beverage stocks history. Stocks, GMPR included, could also catch a tailwind from short covering, especially as news that COVID-19 restrictions are being eased well ahead of schedule. And while GMPR is a micro-cap in size, the investment proposition offered may be equal to or better than those with billion-dollar market caps.
In fact, GMPR is deserving of its recent run and newfound attention. In the past four quarters, they not only demonstrated the perseverance needed to survive massive business turbulence, but they also capitalized on opportunities created through hardship and inked deals that could translate into massive revenue-generating triumphs.
Better still, at least two deals could drive shareholder value higher in the coming days and weeks. Thus, with volume and price moves often preceding news, the 31% surge last Friday could be a message in disguise.
Deals In-Play Are Value-Accretive
In fact, investors following GMPR know that at least two potentially lucrative deals are already in play. Even better, they can be catalysts to drive shareholder value higher. The first is likely to come from potential add-ons to its recently announced high-margin contract with its Pizza Fusion subsidiary. The original deal is expected to generate revenues over $675,000 this quarter, and better still is likely the first of several more near-term Pizza Fusion contributions. In fact, GMPR has exuded confidence that its Pizza Fusion subsidiary could capitalize on massive expansion opportunities by targeting a shift in consumer dining patterns created by the pandemic.
The second deal raises eyebrows for sure and could become the most lucrative agreement in GMPR's history. This one, expected to launch "imminently," brings GMPR together with a New York Times Best-Selling author and comedian to launch a specialty line of pancake and syrup products targeting a massive 272 million person market, according to Statista Research.
Considering the success in similar celebrity-branded products, GMPR could see its deal following trends of other celebrity-partnered products that have generated hundreds of millions in revenues by combining a quality product with a famous name.
Keep in mind, Ciroc Vodka, Patron Tequila, and Casamigos Tequila started as small celebrity partnered brands, too. Now, each is valued at well over a billion dollars in today's market. In fact, George Clooney's Casamigos Tequila sold for $1 billion in 2017. Thus, there is an excellent precedent in place.
Better still, GMPR investors may benefit from a quick valuation response since its newest pancake and syrup product and partnership immediately expands GMPR's asset portfolio by adding another high-margin product under management. Best of all, from an investor's perspective, the launch is expected to fuel a value-creating catalyst that puts an additional revenue stream in play. Moreover, with speculation rising that the celebrity is a highly well-known personality, the release of the partner's name, in and of itself, could trigger substantial share price gains. There's still more.
A third deal earning attention is an extension of its agreement with Christopher Street Products. There, GMPR increased its ownership stake and is accelerating plans to broaden its licensing contracts, which, by the way, is happening through GMPR's ambitious and active acquisition strategy.
And while the totality of active deals already shows promise to deliver near-term revenue growth, investors can expect more in the back half of 2021. Having successfully navigated the economic challenges created by COVID-19, GMPR management has made no secret of its intent to capitalize on additional promising acquisition opportunities. Most importantly, they have proven they can create, develop, and close potentially lucrative deals.
Brand Expansion Under Strong Management
Although Gourmet Provisions is trading at the $0.06 level, its price is more a result of uncertain markets than an indication of where GMPR will end in 2021. In fact, GMPR is better positioned now compared to where they were when share prices traded at $0.15 pre-pandemic. Better yet, the back half of 2021 adds yet another chapter to its history of growth.
Gourmet Provisions has grown from a three-store pizza operation to a company with four wholly-owned subsidiaries, each targeting its own diverse market opportunities. And while the pandemic indeed affected operations, because of pro-active maneuvers, management has positioned its subsidiaries to emerge stronger than ever to penetrate their respective categories in the back half of 2021. Enhancements to its management team will make sure initiatives stay on track.
Gourmet Provisions seized an opportunity to strengthen its team by hiring industry veteran Jack Brewer from Brewer Media Group as a Brand Ambassador. His expertise helped GMPR navigate the challenges imposed by the pandemic and is instrumental in expediting the company's aggressive business strategies to create value sooner rather than later. In fact, the carefully orchestrated strategic moves in Q1 have placed GMPR in an excellent position to leverage its assets to drive record-setting performances during the second half of 2021.
The most significant push in revenues could come from new strategies focusing on online sales. Even in the early stages of the market recovery, its online presence is helping to change the revenue-generating trajectory at the company. Add in an updated and attractive social media footprint and a determination to seal the deal on potentially lucrative acquisitions; it's fair to say that GMPR is better positioned than ever to create meaningful shareholder value by maximizing accretive and organic opportunities.
Benefits From Subsidiary Traction
Keep in mind, too, that GMPR should be valued as a sum of its assets. Accordingly, the company is already deserving of a substantially higher valuation. In fact, its wholly-owned subsidiaries - Jose Madrid Salsa, Pizza Fusion, Exclusive Tap House, and PopsyCakes – each is positioned to accelerate growth in the back half of 2021.
In fact, GMPR is entering hyper-growth mode. Thus, while the intrinsic value from multiple ownership stakes appears entirely neglected in current valuations, markets generally pay for their mistakes and aggressively bid disconnects higher. Expect news from GMPR to be the driving force to correct a massive undervaluation.
The Spark To Share Price Appreciation
The excellent news for investors is that GMPR is already a revenue-generating company. Better still, those revenues will be met by an improved capital structure. In Q1, investors applauded the company's announcement that Authorized Shares had been reduced from 3 billion to 300 million. Currently, GMPR only has around 75 million shares issued and outstanding.
Investors also responded favorably after learning that GMPR entered into Lock-Up arrangements with its noteholders, restricting each to just eight million common shares until August 31, 2021. Although there is still dilution, the agreements come at a good time for GMPR and its shareholders by easing selling pressure from early investors. Based on the rally in progress, selling could be over for the time being. Better still, the stand-still agreements put other things in play.
Most significantly, the agreements with noteholders allow GMPR to accelerate steps to earn an uplisting to the NASDAQ markets. Moreover, the lock-up agreement gives Gourmet Provisions the required time to audit its financials, file its S-1, sign an underwriter, and, most importantly, generate the valuation necessary to apply for an uplist. As a result, GMPR's improved balance sheet, accretive acquisitions, and a strengthening economy could all converge to make the rest of 2021 a breakout year for GMPR.
Indeed, with at least three near-term catalysts lining up to create value in the coming days and weeks, share prices at current levels may not last long. And with investors adage that a surge in price and volume usually precedes news, expecting something good from the company could come sooner rather than later.
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