Puration Inc. (OTC Pink: PURA) is busy, and investors are interested. At the close of trading last week, the stock is higher by 137% since the start of the month. While that is undoubtedly impressive, since the beginning of the new year, the stock has rallied by more than 374%. The spike comes as investors take notice of several announcements showing PURA’s ability to make deals and take advantage of emerging market opportunities. Obviously, investors believe they have found value at these levels. And news from the company sets the stage for additional share price appreciation.
PURA has never been shy to make accretive deals. A big one happened in December when the company took a 5% stake in Alkame Holdings, Inc. (OTC: ALKM). By the way, that deal is generating balance sheet gains, with shares of ALKM surging by more than 512% since the deal was announced. Alkame is PURA’s packaging and logistics partner for its popular EVERx CBD-infused water, it’s flagship product that generated more than $2 million in revenues in 2019 and is expected to report better results for 2020.
Another big announcement came last week when PURA announced plans to break ground this summer on its 70-acre property in Farmersville, Texas. That spot will be the primary operating of PURA and is being designed to accelerate market penetration of multiple company interests. A multimedia presentation provided an overview of how the company plans to leverage several partnerships to attack numerous market segments. Notably, PURA announced that the facility will play an instrumental part in launching its new hemp lifestyle brand business that targets an industrial hemp market expected to reach $15.2 billion by 2027. Already, the market is a more than $5 billion opportunity.
Investors like what they are seeing and have bid the stock higher. But, the sum of the parts could lead to even higher price levels.
Multiple High-Dollar Market Opportunities
Although February is only half over, it has been one of the best months for share price appreciation in its history. The stock is down from all-time highs, but the trend in place is decidedly bullish. And volume indicates no signs of that trend weakening. Its Texas project is leading current investor discussions.
Several popular investment sites are reacting favorably to PURA’s Farmersville, Texas project. In particular, investors note that the facility will immediately position PURA to capitalize on a massive hemp market opportunity and create partnership opportunities with other small hemp-focused companies to pursue pilot enterprises showing the full utility of hemp. And although the hemp market is not yet making front-page news, it’s an emerging industry whereby early players can position themselves to benefit from the plant’s enormous utility in the industrial and consumer products markets. Already, in fact, PURA announced entering into a partnership with PAO Group, Inc. (OTC Pink: PAOG) to build an indoor hemp cultivation operation intended to develop a proprietary, pharmaceutical-grade hemp cultivar. Thus, PURA is already establishing a footprint in the space.
Two other deals are attracting attention. The first is again with Alkame Holdings Inc., with whom PURA intends to produce and test market a CBD infused liquid sugar, a CBD infused pet food supplement, and CBD-infused consumer products. Each of those markets represents billion-dollar opportunities. Its second deal is with North American Cannabis Holdings, Inc. (OTC Pink: USMJ), with whom PURA announced entering strategic negotiations. Details of that alliance are expected soon. But, the value in USMJ is surging, too, leading some investors to believe that more good news is on the way.
The excellent news for PURA is that while it is developing multiple interests in different sectors, a common thread keeps each project accretive to earnings. And, while the Farmersville construction cost will use up some of the company’s capital, its proactive stance to create partnerships ahead of the build should help PURA quickly recoup expenses in the coming quarters.
Momentum To Start 2021
Keep in mind, too, that the increase in PURA’s valuation has resulted from steady accumulation. Investors first started to push the stock higher in January after PURA guided that revenues for its EVERx CBD-water will again reach, or surpass, $2 million. Those results are encouraging as sales faced headwinds from the ongoing pandemic that strained consumers and limited access to the product. Thus, as the virus becomes more manageable, the expectation is that sales for EVERx can ramp higher as the logistical hurdles ease. Investors are also attracted to the fact that while EVERx may be its flagship product, it’s just one part of a growing portfolio of products and interests that PURA plans to exploit this year.
In particular, investors see value in the company’s planned 70-acre property build-out in Farmersville, Texas. The new facility not only brings tangible balance sheet value but positions PURA to expedite plans to extend business operations and benefit from economies of scale by having a centralized operating location. Moreover, PURA has made it clear that the facility is designed to do more than facilitate an expansion of EVERx. They reiterated the important role it will have in launching its new hemp lifestyle brand business.
As noted, PURA is already creating partnerships with hemp-related industry companies to advance its individual pilot projects to support and show the broad utility of hemp for multiple markets. The $5.33 billion opportunities today also compares to the expected $15.26 billion markets by 2027. Understanding the magnitude of the opportunity now puts PURA in an ideal spot to leverage its prowess later. And there is more beyond the hemp opportunity, too.
PURA also announced entering into strategic negotiations with North American Cannabis Holdings, Inc. in a deal intending to strengthen PURA’s interests in the booming CBD sector. Although details of exactly what the two plan to do were not yet released, speculation is that PURA will benefit from USMJ’s current cannabis e-commerce business that is already supported by an existing and fully integrated cannabis products logistics operation. The Farmersville project will likely play a role in expanding that alliance. News of the collaboration helped rally the share price of USMJ, which is also experiencing triple-digit percentage gains.
Notably, PURA and USMJ share the same majority shareholder. That makes it likely that the projects in development will be designed to drive shareholder value higher.
The Surge Is On
Several announcements in January and February has set the stage for growth and value appreciation. And while the build-out of its Farmersville facility will take time, investors appear more than willing to get ahead of the trade. Moreover, with the company extending its market reach by capitalizing on its exclusive license to a novel cannabis extraction process, they see PURA in a unique position to penetrate new billion-dollar-market opportunities by leveraging an innovative extraction technology. The license could accelerate creating new brands that target the massive CBD beverages, edibles, and cosmetics markets.
Also in play is that the Biden administration is expected to eliminate many federal restrictions in the cannabis space. If so, it could put PURA front and center as an emerging growth stock in a sector that will receive massive attention. Moreover, less restriction could provide a windfall of opportunity for PURA’s hemp focused business and EVERx CBD water market. EVERx, in particular, could see an exponential expansion into new markets.
All the pieces together are what makes Puration Inc. attractive at these levels. Better still, the shares have rallied on substance rather than hype. And even with the extraordinary gains already in the books, there could be considerably more room to run higher. Long-time shareholders note that PURA shares have traded at much higher levels and with an infrastructure and diversified business plan that was less extensive than it is today.
Thus, the YTD surge makes sense. And, with fundamentals improving and accretive deals being made to accelerate entrance into new markets, the appreciation in price could continue. And because it has interests in several other publicly-traded companies, PURA can benefit from gains in those stocks as well. Undoubtedly, Puration Inc. is in the right sector, with the right partners, at the right time.
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