Back at the beginning of December, we took a look at MJP International Ltd (OTCMKTS:MJPI). At the time, the company was running up on an acquisition announcement, and we wanted to try and figure out why. We concluded that the momentum came from an operational pivot, and the resulting sales boost this should bring (the company was only generating a few thousand dollars a quarter pre-pivot, so a top line boost shouldn’t be too big an ask).
However, we also noted that this sales boost shouldn’t really be an investment thesis, but instead the potential for positive news on the back of the pivot was a more attractive trigger pull. Get in ahead of announcements, don’t get too attached, and ride up and out.
The company is now consolidating (and has been for the past few days) but we expect the run to pick back up again as the new year rolls in. A couple of announcements drove the gains shortly after we first highlighted MJP, so let’s take a look at these, and try and figure out what to keep an eye on as potentially catalyzing further gains.
For those who missed our previous coverage, we basically said that it looked like the company was dropping its old business model of buying LEDs in China and selling them in Canada and the US, and switching to a solar and renewable lighting product company. It’s timely – there’s plenty of activity in the space right now – and seems like a sensible pivot given the inevitable shift towards green electricity.
What we didn’t know at the time, was what products this pivot would result in the company selling. A recent announcement has shed some light on this unknown. Basically, MJP is going to focus on consumer solar products, with a specific focus on things customers can use outside of the traditional roof panel, home electricity space. These include solar powered motion sensor lights, solar powered hand held torches and solar powered light bulbs.
COO Christopher Hudson, who was previously at the helm of a company that MJP acquired just prior to our previous coverage, had this to say about the fresh portfolio focus:
“We strongly believe in the high demand of the retail sector for solar-powered devices that can be used everywhere and we expect 2017 to be a record year for us across the board”
Now, it’s not going to be tough thing to achieve – a record year. MJP generated practically nothing in revenues during 2016. However, this shouldn’t matter too much. The second announcement brought with it a Texas distribution program, and that alone should help it beat out on last year’s figures.
The important thing here remains news flow, and that’s our thesis on the stock. Specifically, if it can maintain a positive flow over the coming few quarters, it really can’t do anything but appreciate in value. With each announcement of “Record Quarterly Revenues” or “Record Product Sales” should come a boost in market capitalization. As should be the case when the company expands its distribution agreements to other US states.
This isn’t a long term play. There may be some long term value here, of course, but the company is just setting out on a new model, and to say with any certainty whether it’s got a chance of success is too difficult at this stage. It does, however, look like a great momentum stock. There’s plenty of speculative volume waiting to pull the trigger, as illustrated by the recent upside action, and we’re looking to ride that that volume to the upside as MJP plays on sentiment with its press releases and corporate developments. One to watch, and well worth a play, but not one to get attached to – at least right now.
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Disclosure: We have no position in MJPI and have not been compensated for this article.