Micro-cap stocks are surging following a brutal eighteen months of pandemic-related fears that kept risk-tolerant traders on the sidelines. The excellent news- significant value-based opportunities are in play, especially for companies that kept their eyes on the prize and stuck to targeted initiatives. Puration, Inc. (OTC Pink: PURA) is one that did all of the above. Even better, from an operational perspective, they have gotten stronger. Thus, despite PURA's 53% jump in price since last month, fundamentally speaking, its stock is quite attractive.
Even better, those fundamentals are strengthening. Last week PURA announced engaging in hemp processing and cultivation partnerships to establish an industrial hemp brand cooperative under the Farmersville Hemp Brand name. The mission follows a strategy similar to Sun-Maid Raisins, which collectively markets for growers selling under one brand name. But, obviously not using raisins, PURA brings together small to medium-sized players in the hemp industry to collectively market growers and processors under the Farmersville Hemp Brand name.
That initiative isn't just about marketing. It includes a research effort into non-consumable hemp application market opportunities. Already, PURA is said to be in discussions to establish a university partnership intending to expand its research efforts. If they ink a deal, the doors open wide to opportunity and put PURA in an ideal spot to tap into a more than $5 billion global hemp market opportunity. By 2026, though, that market is expected to explode higher to upwards of $36 billion. Thus, being early to the hemp trade may be a wise consideration.
Hemp Is The Real Deal
Indeed, hemp is an investment sector opportunity not getting much headline space. But it should. The global industrial hemp market extends to an ample opportunity, with hemp seed, hemp seed oil, hemp fiber, and CBD hemp oil all offering a value proposition on their own. Combine the raw side with its contribution in consumer products, including food, beverages, personal care products, textiles, construction, and pharmaceuticals, hemp can do for industries what copper is doing for EV. It's a clean, sustainable product vital to advancing a clean-environment agenda. Plus, it's a fantastic product. Hemp-based clothing already earns a premium price in the markets.
Most importantly, PURA understands the massive opportunities in play. And its strategy to enhance the Farmersville Hemp Brand collective marketing initiative by conducting focused, hands-on seminars for established companies with existing products makes sense. Better still, they are bringing companies that aren't maximizing their market opportunities to show those established companies how hemp can enhance their current product lines. These companies are already good from the raw materials side. PURA thinks they can make them even better and introduce them to the products side as well.
And its plan is taking shape. PURA announced breaking ground on its 70-acre property in Farmersville, Texas, with a construction pad cleared to build multiple buildings where PURA can facilitate hands-on training and provide insight to effectively market a wide variety of hemp-derived products.
It's a comprehensive program designed to provide mutual benefit. At the core of the Farmersville Hemp Brand Facility is its ability to host client companies for seminars, demonstrating hemp processing and how hemp can be used as a natural, cost-effective, and even superior alternative to currently available construction materials, nutraceuticals and pharmaceuticals, clothing, fuel, and plastics. And those applications are only the tip of the hemp iceberg. Estimates for hemp's use are said to expand into more than 25,000 useful consumer and industrial products. The better news on that front is that PURA isn't waiting until the facilities are complete. Instead, they are moving forward quickly to start the program.
Plans are in place to launch its first seminars in Q4 2021. And it will add to its other projects that are back on track after the pandemic-related slowdowns.
Measured Growth In A Booming Hemp Sector
Indeed, PURA stock got battered in the market-wide stock downdraft created by COVID-19. Even larger companies, especially sector-focused stocks, weren't spared as investors minimized risk to weather the storm. Now, with economies normalizing, investors are checking back into the micro-caps and finding that while values declined, fundamentals didn't. That's the case for PURA.
In fact, investors are certainly taking notice by sending shares higher by roughly 53% since September. But, with new initiatives and logistical hurdles in the sector evaporating, those gains are likely the start of more aggressive moves to the upside. And from an operational perspective, recent partnerships and agreements appear to put PURA in its best position ever to create significant value in Q4. As noted, 2022 is likely the breakout period.
Why? Because while it may have taken a few extra months to move some of its projects forward, it is understandable considering the business climate. However, PURA is back on track to create shareholder value. Better said, they are doing things to drive its share price higher. In fact, looking back a quarter, several deals that dropped from focus still keep PURA stock a compelling value proposition.
Partnerships, Farmersville, And A Considerable Hemp Interest
A significant value driver is its plans to develop its 70-acre property in Farmersville, Texas, serving as its operating hub to accelerate multiple diversified projects. Now, with ground broken and construction ongoing, PURA is pro-actively creating value by attracting new partnerships that will leverage the facility's resources.
In those deals, PURA will work with PAO Group, Inc. (OTC Pink: PAOG) and North American Cannabis Holdings, Inc.(OTC Pink: USMJ) to target industrial hemp and CBD markets. Another deal with Alkame Holdings, Inc. (OTC Pink: ALKM) is expected to help accelerate sales of its flagship EVERx CBD-infused water and utilize the planned facility to maximize logistical efficiencies.
Notably, PURA is already driving revenues higher, with sales of its EVERx CBD-infused water expected to have robust sales despite limited logistical support to get products to retail outlets. PURA was expecting sales of this specialty CBD-infused water to stay above $2 million despite the enormous logistical headwinds created by COVID-19. An update later this quarter should highlight sales of the product.
Still, allowing for some sales pressure, revenues are revenues, and at less than two cents a share, that factor is not priced into the stock. Most companies at PURA's level are yet to get a single product to market. PURA has a few with a financial interest in several more that are also expected to make their way to the markets in the next quarter or two.
Thus, investors should pay close attention to management's commentary to offer insight into marketplace conditions, looking for encouraging news that consumer markets are trending back toward normal conditions. Reports from news sources are showing that to be the case. Hence, confirmation that PURA's interests are part of the economic rebound could be a catalyst for the stock.
And they have several interests to drive value.
Multiple Financial Interests Put PURA In-Play
The more excellent news is that as the economy strengthens, PURA will likely follow. And that should happen as a result of prior initiatives and because they are positioned to re-engage its aggressive acquisition and investment strategy to drive shareholder value.
Past deals are likely to power up as well. Its deal made last December, for instance, has been credited for its immediately accretive effect on its balance sheet. That deal with Alkame Holdings, Inc. gave PURA a 5% stake in that company and added value from an operational perspective and a balance sheet investment. However, the near-term value expected from that interest was sidetracked as the pandemic wreaked havoc starting that same month. But, heading into 2022, the intended value creation from that deal should become a factor in driving share prices higher. Alkame, by the way, announced last week entering discussions with an investor to structure financial backing to accelerate PURA's new Farmersville Hemp Brand initiative. Thus, PURA's stake earns value as well.
As noted, the growth of EVERx CBD-infused water is expected to ramp, with PURA expecting to benefit from economies of scale and better logistical services from Alkame, who serves as PURA's packaging and distribution partner. Details of the relationship's impact should become more transparent when PURA announces its sales update expected as soon as next month. Investors are watching to see that new efficiencies help drop revenues faster to the bottom line. Top and bottom-line growth are therefore in focus. Success in either metric is a value driver. Combined, they become a catalyst.
And, PURA's deal with PAO Group intends to expedite its entry into the hemp markets. The joint effort is expected to accelerate both company's entry into the fast-growing specialty and industrial hemp market. Specifically, PURA intends to capitalize on an opportunity to align closer to PAO Group, which plans to exploit its own opportunities in a billion-dollar CBD pharmaceutical market.
Two other deals can add substantial shareholder value in the coming months. First, PURA announced an expansion of its partnership with Alkame Holdings Inc. to produce and test market a CBD-infused liquid sugar, a CBD-infused pet food supplement, and CBD-infused consumer products. Alkame is expected to provide the logistical support to capitalize on substantial opportunities in multiple markets and expedite the development of new products.
Puration also announced starting "strategic negotiations" with North American Cannabis Holdings, Inc. to accelerate development-stage programs targeting new market verticals. North American Cannabis Holdings adds additional expertise in the CBD and cannabis space that could benefit PURA both near and long term. Investors are likely to get an update on how that agreement can impact growth during its Q4 update.
Hence, it's fair to say that a lot's happening at PURA. Better still, it's an accretive plan that could make revenues more impactful sooner than later.
A Surge In Q4 2021 And Momentum Into 2022
The most excellent news is that investors are again in the game, bidding shares of micro-caps gigher in the process. And while PURA shares are higher by 53% since last month, updates from the past week alone make the value proposition even more compelling.
Thus, although PURA stock was pulled down in a penny stock downdraft, they look ideally-positioned to take matters into their own hands and drive value back to a more appropriate level.
With its fundamenals sound and agreements expecting to accrue this quarter, a return toward the $0.07 level is not unlikely. Thus, with a buy signal earned and substantial gains since last month, PURA stock is again enticing investors to recognize its value proposition. The better news for investors is that the stock is reacting as it should to its updates- moving higher.
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