Chris Forte’s “Thoughts to Start the Day” – Around the Feed

Posted on May 11, 2022 by Breakout Investors

Assertio (ASRT) was up 17.5% to close at $2.21 yesterday after the small Lake Forest, Illinois-based pharmaceutical company reported a terrific Q1. Sales of $35.5 million were 37% higher. Gross profit margin was 88% or 344 basis points higher than the prior year due to the change in product mix and improved margins on Indocin. Net income of $9.1 million was $4.5 million or 99% higher than the prior year. Wow, that is some restructuring. 

“The first quarter is in many ways representative of the new Assertio and one that shows the promise of our operating model and our ability to quickly integrate new assets like Otrexup into our platform,” said Dan Peisert, President and Chief Executive Officer of Assertio. “Due to the strength of our results to date and the confidence we have in the outlook of our business, we are raising the full year non-GAAP adjusted EBITDA guidance.” 

ASRT, with a tiny market cap of $94M sees an attractive pipeline of potential drugs to acquire. With excellent new management that’s making debt refinancing a priority it’s a cash machine trading at a ridiculously low valuation. Strong Buy. 

On the other hand, there is radar maker RADA, which after 15 quarters of strong sequential growth, had a hiccup due to the the 5-month US budget delay and the Continuing Resolution (CR) which finally ended March 11. “CR, which is now behind us, was a temporary impact that did not change the bigger picture.” Some short sighted investors didn’t wait around for explanations as RADA closed down 12.5%. 

RADA did not change their revenue prediction for 2022 stating that the temporary delays will be made up in the ensuing quarters. The CEO was clear that orders and strong demand is very much intact. A long-term positive was the CEO clearly stating that GLOBAL DEMAND building. “The rest of the world, which I divide into the Near East Europe/NATO countries and the Indian subcontinent should reach based on our estimation, revenue levels similar to the USA within three to four years and recent events have only made us more confident in this expectation.” That should create substantial growth. 

In Ukraine much of the fighting involves drones and missiles which RADA’s equipment protects against. Europe and other parts of the world have vowed to arm up. This is right in RADA’s wheelhouse. I expect to hear multiple news releases from the company this year disclosing more sales to both domestic and global militaries. If you missed any of the previous runs in RADA now is your chance to reload. 

For Breakout Insider subscribers, Aaron Warwick shares “Notes from PESI Call” and Scott Shuda discusses the latest Wisdom of the Crowd, “Is the Selloff Done?” 

The outstanding BI podcast series is back with “Episode #53- DMIFF with Florian Buschek.” As always it’s 10 minutes of “must hear” investing. Florian also shares with us insightful, “Notes from public call with Boardwalktech” on the Feed. 

Andy Warhol’s Marilyn Monroe portrait sold for $195 million. That’s twice the market cap of Assertio! And the portrait has no earnings and won’t relieve arthritis pain. 

Speaking of beauty, The Beauty Health Company (SKIN) maker of the highly popular Hydrafacial delivery system reported sales of $75.4 million, an increase of 58.6%. Consumables increased to $33.8 million in Q1 2022, compared to $21.9 million in Q1 2021. You gotta love razor/razor blade health companies. 

If this doesn’t fill up your heart visit a cardiologist to see if you have one…

“This young Aaron Judge fan will NEVER FORGET this moment!” 

(BTW, the players were so moved by this moment they brought all involved into the dugout to meet the youngster’s hero – another tear jerker.  It proves there is good in the world and there IS crying in baseball.  BTW, I didn’t tear up, I got dust in my eyes.)

“Sometimes good things fall apart so better things can fall together.” – MARILYN MONROE

Good luck to all – Chris

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