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SIPP INDUSTRIES INC (OTCMKTS:SIPC) Leveraging Its Distribution Channels

SIPP INDUSTRIES INC (OTCMKTS:SIPC) Leveraging Its Distribution Channels
Written by
Jarrod Wesson
Published on
April 3, 2018
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SIPP INDUSTRIES INC. (OTCMKTS:SIPC) is showing signs of commencing a new upward trend after coming under pressure in the last two months. Following a decline from the 52-week highs of $0.08 to $0.03 mark and consolidating movement at the $0.02 - $0.04 range, the most recent price action indicates that the bulls may be back. Check the following 1-year chart for this name: 1-year chart for SIPCFor starters, Sipp Industries is based in Costa Mesa, which is a city in Orange County, California. The company, founded in 1991, casts itself a multifaceted corporation that specializes in technology, manufacturing, and distribution of commercial and consumer products. Through its wholly-owned subsidiary, Major Hemp, the company provides hemp beer, high quality and competitively priced bulk hemp, CBD supply, co-packing, and private labeling services.As we have assessed in previous pieces, the most important assets of SIPC are owned by Major Hemp. The tremendous share price spike seen in December 2017 was originated by these businesses’ interests in the marijuana industry. Keep in mind that the legalization of certain forms of cannabis in California in 2018 made the industry jump. In January, like other marijuana stocks, SIPC benefited from the legalization delivering double-digit returns to market participants, who made proper due diligence on this name. Logos - SIPP INDUSTRIES/SH OTCMKTS: SIPC2018 is expecting to be beneficial for the stockAfter the price spike seen in December, the company again surprised the market on January 23, 2018, telling that its premium craft hemp beer would be ready for distributors in early February. Additionally, getting to know that Sipp Industries had recently initiated another production run with Denver based brewing partner Sleeping Giant Brewing Company was remarkable. The two companies forecasted triple production to fulfill expected demand.With those expected figures in mind, many market participants pushed up the share price making around 30% returns in only one session. While the share price retraced back the following days, yet we believe that a rebound play was already in the mind of many market members.There is more. In January 2018, SIPC also released that it is expecting to distribute Major Hemp Brown Ale in the state of California, and the formal announcements should be expected in the "near future." Given the size of the beer market in California, the market is expecting a lot of revenues from SIPC. This feature and the following words said by Syman Vong, Chief Executive Officer, are the most significant reasons to follow this name:

“Our team has been working diligently with our production, distribution, legal and regulatory partners and all the pieces are coming together. We expect 2018 to be an incredible year for Sipp Industries and our flagship brew, Major Hemp Brown Ale.” Syman Vong, Chief Executive Officer of Sipp Industries said.

The distribution in ColoradoIn February, SIPC discussed how its operations in Colorado were going and noted that "similar and greater successes" should be expected in California. Colorado Craft Distributors was serving over forty-five establishments and had remarked that reorder interest was high. On the top of it, SIPC also commented that it expects to win numerous new locations this year. With these words in mind, we will be very interested in the next quarterly earnings release. New revenues should show up and make the share price run.Regarding the business in California, another public entity, Wanderport Corp. (OTCMKTS: WDRP), is the partner that is helping SIPC expand into the state of California. Both companies had successfully completed a trial production with a Southern California craft brewery and an actual production was expected to start in February. While the market did not react to all these beneficial information, yet we believe that the company is working in the right direction. Check the words of the CEO:

“We are pleased with the success of Major Hemp Brown Ale in Colorado and expect to have similar and greater successes as we expand to California and beyond,” commented Syman Vong, Chief Executive Officer.

What did make the share price increase in March?On March 14, 2018, the company released another update, wherein once again it was noted that demand was increasing. According to the new press release, a growing number of new customers were requesting samples of Major Hemp Brown Ale for the upcoming events throughout the state of Colorado. Despite the fact, this information does not mean new revenues; it clearly indicates that customers are interested and money could flow to SIPC.There is another important detail.SIPC also reported conversations with a popular national restaurant chain, Cheba Hut, for broader distribution in the greater Denver area, Dillion, Fort Collins, Longmont, Boulder, and Greeley. Additionally, the company was said to be meeting a large brewery in Indianapolis this week to discuss hemp beer production and distribution throughout the state of Indiana. These two announcements indicate that product demand is so large that SIPC is asking for distribution help to other chains. Additionally, entering the market in Indiana is beneficial. It should mean more revenues in the near future.ConclusionCurrently trading with a market cap of $11.1 million, SIPC is an exciting story among small caps. With $0.29 million assets and $0.076 million total liabilities, the financial situation is stable. The 2016 annual revenue was $0.05 million, and we have not seen revenue growth in Q2 and Q3 of 2017. So, it seems that the moment is now for this name. In our opinion, if SIPC has what is due, it should show revenue growth in the next quarterly reports to be released in 2018.To sum up, follow this name; it should surprise soon.Be sure to check out our coverage on SIPC!Disclosure: We have no position in SIPC and have not been compensated for this article.Image courtesy of Matthew Kenwrick via Flickr.

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