"To keep our body in good health is a duty. Otherwise we shall not be able to keep our minds strong and clear."
Buddha.
FITLIFE BRANDS
Ticker: FTLF
Identifying the most promising small-cap companies globally is a challenging endeavor. It involves a meticulous examination of thousands of enterprises. Hours are spent scrutinizing financial statements and employing various screening tools.
However, occasionally, a hidden gem emerges from this extensive analysis. Today, I have come across such a company.
Fitlife specializes in the distribution of sports supplements, including protein powder, fat burners, and creatine, that shit... The company maintains a diversified product range and multiple brands.
In recent years the share price has outperformed the S&P 500. 184% vs. 35%.
That's how it's done.
FUNDAMENTALS
Sales growth has been steady, if not spectacular. Particularly in the last year, they have skyrocketed, surpassing the average.
Earnings per share (EPS) growth has been moderate but positive. Most small-cap companies cannot say the same.
Where the company truly excels is in terms of return on capital and sales per employee. Both ROE and ROI are significantly above the industry average. Sales per employee are comparable to those of a software company. I suspect they must have robots doing the packaging or something similar.
This isn't your typical deep value stock. It's trading at a P/E of 20. But compared to US companies, I think it's a steal.
The company has been diluting the shareholder, a meager 3%. It's not noticeable in the Balance Sheet.
Despite this, they have filed a shelf registration with the SEC that would allow them to issue up to 600,000 shares in a public offering, assuming the company's current float remains unchanged. This means there could be shareholder dilution at any time. This is an important point to consider before to invest in it.
The company has committed to not selling securities in a public primary offering with a value exceeding 1/3 of its public float in any 12-month period so long as its public float remains below $75,000,000.
Given its positive free cash flow, the company may not need additional cash. However, this could change if its expansion plans are ambitious.
Institutions own 49% of the shares. I suspect this percentage will continue to increase, which is positive for the stock price.
The arrival of the new CEO has been very positive for the share price. According to the annual report, he owns 56% of the company's shares, so he is highly aligned with its performance.
TECHNICAL
The price has formed a series of bullish continuation patterns. It has been trending upwards since 2019; there's not much more to say.
A potential entry strategy could be to wait for a pullback to the $27 level, which coincides with the base of the latest price consolidation zone.
Another option would be to buy on a breakout above the $35 level.
CYCLES
If an asset exhibits a continuous uptrend, cyclical patterns become distorted and less predictive. Here, traditional cycle analysis may only be applicable over shorter time frames.
The chart highlights the points where potential cycle shifts would occur.
FINAL NOTES
With Robert Kennedy as the U.S. Secretary of Health, Americans aren't going to be exercising less, that's for sure. America is fucking back, as I saw some guy tweet the other day. Exercise and sports supplements too.
Sports as a way of life, are here to stay. The gym is the new temple. Body worship is the new religion. Joe Biden used to jog into his public appearances before becoming president. He appeared young and strong. An athlete who does sport regularly.
Fitlife has the fundamentals, the technical analysis, and the Zeitgeist of the era on its side.
They even have their headquarters in Omaha, the land of the legendary Buffett. I've seen few companies with such aligned factors. And with a market cap of only $157 million, it still has a long way to go.
The only negative factor is the shelf registration request with the SEC, and the potential price drop that a dilution could cause.
Take care outside!!!
And that's it for today's article. If you liked it, be generous and share it with others.
Thanks for reading.