Can Bemax Inc (OTCMKTS:BMXC) Climb Further?

The last time we looked at Bemax Inc (OTCMKTS:BMXC), the company had just staged a run that saw it rise from $0.006 a share to more than $0.017. The run was what drew our attention to the company initially, and sometimes when we dissect a runner, especially at this end of the market (sub pennies), we lose interest. When we took a look under the hood here, however, we saw a bit of potential. Nothing spectacular, at least not near term, but given the company's then-market cap, we thought there was some run room left for Bemax if it could maintain its course.As it turns out, our expectations were correct.The company currently trades for a little over $0.03 a share, a more than 75% gain since our previous coverage. Now, then, it's time to ask the question, what's next? Is there further run room left, or has this one topped out for now?Let's take a look.So, for those that missed our previous coverage, Bemax isn’t a particularly glamourous company, but that doesn't matter when it comes to objective potential. It bills itself as being a seller and distributor of household products, particularly low cost staples, across a range of markets globally. These markets include Europe, Asia, Africa and, the market in which Bemax is HQd, the US.That description is a little misleading, at least when considered against its current operational focus. Right now, the company's range of staple products is limited to one core product – disposable diapers. Additionally, its global markets are really just one one market – South Africa. That's not to say there's no potential for expansion going forward (indeed, Bemax management has stated that its strategy involves acquisition of staples produced by other companies to expand its portfolio), but right now, it's diapers in SA.The question now becomes, then, what is the SA diaper market like? The answer, fragmented. Unlike in the US and the majority of Europe, there's no real market leader in many of the staples in SA. This opens up the possibility for a player with a solid, low price product to quickly gain market share, and that's exactly what Bemax is trying to do there.And there's some indication that this strategy is paying off.Bemax announced on January 31, that it had received a purchase order for $1.1 million or the supply of its private-label diaper from an existing client, a major distributor of the diaper product in SA. This is an extension of an agreement initially signed back in 2015, and represents the first tranche of said order for 2017.To offer some perspective, this company currently trades for a market cap of less than $9 million. An order for $1.1 million that should serve as the first of four similar sized orders throughout the remainder of 2017 suggests that this $9 million is an undervaluation.Adding to the attraction is the recent retiring of 150 million shares of common stock for 50 million series B preferred, which effectively reduced the total issued and outstanding number of common shares by 33.21%. That's direct shareholder value-add, something that isn’t often seen at this end of the market.What's next?For us, it's all about the product portfolio. If Bemax can use the revenues it generated from diapers to expand its portfolio, and further its reach, then this could be the start of an aggressive but controlled (and rewarding) growth strategy. Additionally, there's no need for dilutive financing near term, as stated in the release that announced the above discussed purchase order.Let's answer our question – is there more upside potential on the stock from current levels?We think so, yes. It's not a particularly attractive stock operationally, but there are some decent gains to be had here on a buy and hold.We will be updating our subscribers as soon as we know more. For the latest updates on BMXC, sign up below!Disclosure: We have no position in BMXC and have not been compensated for this article.