Sun Kissed Industries Inc. (OTCMKTS:SKDI) continues to hit our speculative radar as a potentially extremely undervalued name in the high-end specialty food and beverage space given its recently closed acquisition of Hakuna Supply, a an award-winning CBD-products company, currently nominated for “Best Hemp-Derived CBD Product” by the California Cannabis Awards after winning the DOPE Magazine Best New Product award for Southern California in the non-cannabis/non-tech category in 2017.
Hakuna already boasts significant revenues with a substantial distribution footprint, including over 110 established retail distribution partners across over 20 states in the domestic US market.
One reason SKDI might be so undervalued here is the simple fact that the market may not have actually priced this acquisition in at all. If we assume Hakuna will pull in $5M on the topline over the next year (not remotely unrealistic according to our analysis of the company and its market positioning and brand), then we are dealing with a stock trading at less than a 1x multiple to sales, which is absurd.
A Growing Brand
Hakuna is also continuing to ramp its brand and exposure. The company just announced a very successful showing at the CHAMPS Trade Show in Las Vegas, which is still currently underway.
According to the release, the Company has been demonstrating its Legacy Lock Box, which is biometrically controlled through cutting-edge technology and a sleek design with an ingenious fingerprint access mechanism. The Company has already booked strong sales at the show and anticipates an even stronger performance in terms of fresh sales through the end of the event on Friday, given the amount of attention Hakuna products have already received.
“The fingerprint boxes are a huge hit,” commented Hakuna CEO, Ilan Freeman. “We have already been approached by several distributors who want to bring this product on, including some looking for exclusive access. We have also been giving a sneak preview of our high-end coffee capsules but are in the process of finalizing packaging before we can reasonably engage buyers. Furthermore, we plan on taking some of our larger buyers out to dinner this evening in effort to close a major contractual agreement that could be an immediate game-changer for Hakuna.”
But it’s apparently not just about growing sales at the event. The company also noted in the release that it met with a co-founder of one of the largest headshop ecommerce sites and reached a verbal commitment for distribution through this site of the biometrically controlled Legacy Lock Box, which would also include aggressive social media marketing through the site, engaging its 300k-plus followers.
So, SKDI is absurdly undervalued because the market has yet to price in its Hakuna acquisition. That’s not abnormal for these very small stocks. The price adjust will happen. It should just be a matter of time.
Right now, the stock is testing support at the widely watched 50-day moving average, which is a good spot for bigger, smarter money to start moving back in. We are in an uptrend since putting in lows in early January. This may be a very opportune time to take a close look.