Article

BUY DAVIDsTEA

December 13, 2018


 

 

DAVIDsTEA Inc. (DTEA) $1.89

Based on the proprietary Subjective Probability -Game Theory  Model algorithm, a buy signal was flashed this morning. DTEA is under stealth accumulation and suggests the buying interest represents a prelude a takeover. With an SP-GTM rating of +7, the risk equation is limited.


BUY DTEA at the current price for a potential target price of $6.50.

DAVIDsTEA Inc. operates as a retailer of specialty tea in Canada and the United States. The company offers approximately 135 loose-leaf teas, pre-packaged teas, tea sachets and tea-related gifts, and accessories; and food, as well as tea beverages, such as hot or iced tea, and tea lattes. It provides loose-leaf tea in white, green, oolong, black, pu'erh, mate, rooibos, and herbal tea categories. The company owned and operated 240 DAVIDsTEA stores. It also provides its products through its Website, davidstea.com. The company was founded in 2008 and is headquartered in Mount-Royal, Canada.

With the significant marijuana public companies in Canada flushed with excessive stock values and “paper takeover” is likely in the near term. The primary draw is the 240 DAVIDsTEA stores throughout Canada, which represents a perfect platform for marijuana branded products.  SP-GTM rating of +7 manes the risk for stock ownership is low and stock appreciation reward is high.

… by the other numbers.

Valuation Measures
Market Cap (intraday) 49.13M
Enterprise Value    16.75M
Price/Sales (ttm)    0.30
Price/Book (mrq)    0.73
Enterprise Value/Revenue    0.10
Enterprise Value/EBITDA    -4.96
Financial Highlights
Currency in CAD.
Fiscal Year
Fiscal Year Ends     Feb 2, 2018
Most Recent Quarter (mrq)    Aug 3, 2018
Profitability
Profit Margin     -15.67%
Operating Margin (ttm)    -5.54%
Management Effectiveness
Return on Assets (ttm)    -4.95%
Return on Equity (ttm)    -31.11%
Income Statement
Revenue (ttm)    162.08M
Revenue Per Share (ttm)    6.26
Quarterly Revenue Growth (yoy)    -12.10%
Gross Profit (ttm)    107.24M
EBITDA     -3.38M
Net Income Avi to Common (ttm)    -25.39M
Diluted EPS (ttm)    -0.98
Quarterly Earnings Growth (yoy)    N/A
Balance Sheet
Total Cash (mrq)    29.79M
Total Cash Per Share (mrq)    1.15
Total Debt (mrq)    N/A
Total Debt/Equity (mrq)    N/A
Current Ratio (mrq)    3.49
Book Value Per Share (mrq)    2.60
Cash Flow Statement
Operating Cash Flow (ttm)    -4.39M
Levered Free Cash Flow (ttm)    -13.94M
Trading Information
Stock Price History
Beta (3Y Monthly)     1.27
52-Week Change 3    -54.10%
S&P500 52-Week Change 3    -0.57%
52 Week High     5.35
52 Week Low 3   1.70
50-Day Moving Average     2.10
200-Day Moving Average     2.89
Share Statistics
Avg Vol (3 month) 3    1.9M
Avg Vol (10 day) 3    582.28k
Shares Outstanding 5    26M
Float     13.67M
% Held by Insiders     46.32%
% Held by Institutions     12.31%
Shares Short (Nov 14, 2018)     1.16M
Short Ratio (Nov 14, 2018)     1.74
Short % of Float (Nov 14, 2018) 4    26.10%
Short % of Shares Outstanding (Nov 14, 2018) 4    4.48%
Shares Short (prior month Oct 14, 2018) 4    848.58k

 

note:  As part of What Should Happen Series, we have applied our proprietary algorithm to investigate and disclose “special situations” within the cannabis industry that warrant consideration as strategic investments, business combinations, joint ventures  or outright acquisitions. By disclosing our research through this series, we offer our shareholders an inside track as to the events evolving within the cannabis industry. On August 29, 2018, “Getting into the Game,” the $4 billion investment by Constellations Brands into Canopy Growth, and November 30, 2018, “Scotts Miracle Grow – not a stock to our own unless – Spinoff,” featured how large corporation are addressing entrance into the cannabis industry. What these and similar stories featured in our Cannabis News pages have in common is the desire by deep-pocketed consensus thinkers to participate in the potential of marijuana, even though it is still federally illegal to possess.

 

 

 

 

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