This week the board announced the US$38.4 million acquisition of California based Mineral Fusion LLC, providing the Company with a strong footing in the US market for their well performing Sukin brand. This purchase also provides access to Amazon and Wholefoods which Mineral Fusion has current standing contracts. In fact, management made mention that the Mineral Fusion are also achieving 30% compound annual growth rate in sales volume, and achieves 10 times the average dollar return per area of shelf space in the Wholefoods stores. This acquisition adds to their vertical integration strategy after adding Lightning Brokers, a national distributor of skincare products to their portfolio in February 2016.Monday’s conference call once again provided confidence that management have well and truly got their finger on the pulse with guidance re-affirmed for the full year FY17.
That being said, BWX is a young, smaller company expanding very quickly and the current valuation reflects this growth. With such growth, particularly into International markets, there is always execution risk. Acknowledging this risk, there is also considerable upside in this sector which is fast growing globally.
Although we still remain positive for the outlook of the company, we have taken some profits after the recent announcement given the fast run up of the share price and expect a pull-back which will provide the opportunity to add again, or an entry. Either way we intend to continue to follow the BWX story very closely as in this competitive investment market, it is difficult to find attractive growth stories that aren’t quickly engulfed by the “crowded trade”.
If you would like some more details about BWX or other less covered companies in our watch list feel free to contact us.