Easton Pharmaceuticals Inc (OTCMKTS:EAPH) is threatening to break out, after succumbing to short selling pressure over the past year. Bulls are slowly streaming in, in response to a string of positive developments that continue to affirm the company’s growth metrics.
EAPH Share Price Analysis
The upward momentum is slowly gathering pace helped by a spike in trading volume and improved sentiments in the overall industry. The stock sentiments have especially received a boost on the confirmation the company is poised to acquire a commercial bakery with projected revenues of $20 million.
After a long period of uncertainty, Easton Pharmaceuticals has also confirmed an imminent entry into the Cannabis edibles market where it plans to pursue new opportunities for growth. In addition, the company has entered into a $2.6 million framing contract as it continues to pursue growth in the real estate sector.
Even as the company continues to sign deals for diversifying and strengthening its business portfolio, the company continues to register consistent sales growth. In line with the positive developments that affirm the company’s long-term prospects, Easton Pharmaceuticals has started showing signs of bottoming out from all-time lows.
The stock has remained subdued below the $0.01 level for the longest time. A rally followed by a close above the $0.01 should mark the end of the bear trend that began last year. Above the $0.02 mark, the stock stands a better chance of making a run for 52-week highs of $0.023.
About Easton Pharmaceuticals
Easton Pharmaceuticals casts itself as a pharmaceutical company that designs develops and markets topically-delivered drugs and healthcare products. Its lead product includes Nauseasol, which is a motion sickness gel. The company has sought to diversify its business empire with an expansion into the cannabis sector.
The announcement that Easton Pharmaceuticals is poised to make an entry into the cannabis sector is one of the reasons why the stock is surging. However the confirmation that the company is poised to acquire a commercial bakery that can generate revenues of up to $20 million continues to strengthen the stock’ sentiments in the market.
The acquisition is part of the company’s efforts of diversifying and entering other lucrative sectors in pursuit of opportunities for growth. The company has since signed an agreement to acquire the Toronto based commercial bakery that manufactures white-labeled food products sold in major grocery chains.
The company that Easton Pharmaceuticals is acquiring has opened discussions with licensed producers of cannabis. The commercial bakery is eyeing an entry into the cannabis space where it plans to start supplying cannabis edible products.
“Easton Pharmaceuticals and its management saw an opportunity to acquire a company with not only a proven track record but also major expansion opportunities that can potentially grow its sales to over an estimated $50,000,000 per year. Easton’s management will be implementing some changes that will increase the revenues to approximately $20,000,000 over the next 12 months,” Easton in a statement.
Real Estate Prospects
The acquisition of the commercial bakery comes two months after the company confirmed the closing of a Construction Agreement as part of a $2.6 million framing contract. The deal is for the construction of up to 150 homes outside of Toronto Ontario.
The signing of the construction agreement is part of the company’s effort in entering the home building sector in niche markets. The company has already identified lucrative opportunities in the industry that should go a long way in strengthening its drive for a more diversified company.
The$2.6 million framing contracts should supplement construction works at Cobourg Ontario where the company is developing 42 residential units poised to generate over $30 million in profit over the next 3 years. The agreement should go a long at in strengthening the company’s revenue streams. The company generated sales of over $200,000 for the December quarter
What next For Easton Pharmaceuticals
Easton Pharmaceuticals appears to have hit rock bottom in the market if recent price action activity is anything to go by. The stock is turning out to be a bounce-back play supported by a string of positive developments that affirm the company’s long-term growth.
The acquisition of a commercial bakery is poised to strengthen the company’s revenue streams. In addition, the company is making progress in the pursuit of opportunities in the real estate sector where it has signed multi-million-dollar deals in the recent past. Expansion into the cannabis sector is another development that should continue affirming the company’s growth metrics. Overall, the stock should continue surging on investors taking note of the company’s diversification drive.
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Disclosure: We have no position in EAPH and have not been compensated for this article.