Company Analysis

Instead of just talking about sentiment, i thought maybe lets have a thread for some more constructive information?

Why i think the stock is cheap at the current levels (50c) is as follows.

Market Cap: $104m
Cash ~ $29m
EV: $75m
Revenue FY17E - ~$26m US.
Revenue FY18E ~$40m - $70m US. Research notes on website.

The company sales are continuing to rise. The quarterly had a number of issues, however nothing that is attributed as a core risk and rather temporary being, manufacturing down time. This is always a potential issue when you have a manufacturing business, however as the inventory builds back up the company will continue to grow and expand their distribution channels. This is why I have said it appears cheap and a great buying opportunity from short term 'panic'.

Given the success so far in the USA, it shows that the product has what i would consider, very good appeal for investors. The margins are high, the profit per unit for retailers makes it compelling to sell and the sales indicate there is strong demand from consumers for the product. This isn't a new product and the success level is also previously known from when the brand was previously owned by Cadbury which gives me even more comfort that this brand will continue to be successful.

As the distribution channels expand, and in particular into other markets such as Australia, Canada, Europe etc... it shows this business has global growth potential. It's likely that they wouldn't set up manufacturing in those countries without distribution. It's more likely they would sell inventory from the US before establishing new manufacturing operations as this would lower the risk of setting up at a later date, however doing this it would obviously run on a lower margin, but it would significantly reduce the risk of setting up at a later date. A smart move IMO.
If they do turn into successes (Australia almost a certainty!) then it's likely they would review the options for setting up in those markets.

Basically my investment in the business is that i believe YOW will become profitable and continue to grow revenue in the double digit range for a number of years to come. The risks are minimal given it's current EV is ~$75m for a business that will likely trade on a PE of 20-30x should the growth continue as projected. If the profit targets are hit (they range between brokers but using around $8m NPAT for FY18) this would put the company valuation now between $160m - $240m (76c - $1.14).
It's current EV is $75m at 50c, which is why there is considerable upside in the share price as opposed to  further downside IMO. As the business progresses and continues to grow then next year if it trades at FY19 numbers it would be significantly higher.

Also the chart shows that this 45-55c level has been a considerable level of support previously. I have bought shares recently and the above explains why. Obviously this investment isn't for a week or two, but rather one for years. For those who can see past the short term, there is potentially great reward.