Momentum & Growth

Verus International Inc (OTCMKTS: VRUS) Remains A Top Pick

A lot has been happening with Verus International Inc (OTCMKTS: VRUS) since our last article in March. During this time, the stock broke out to the upside and our subscribers are sitting on 200% plus gains. While the stock has dipped slightly since last week’s new highs of $.036 a share, this pause won’t last long as VRUS is set to resume its bull run. Taking a closer look, there’s a lot to like with VRUS and why we remain bullish.

VRUS Daily Chart

OTCMKTS: VRUS Background

First up, here’s a little background info for those that aren’t familiar with OTCMKTS: VRUS. Verus International operates an international food subsidiary (Verus Foods) that sells branded consumer products to customers worldwide. The company’s pipeline of products is made up of frozen food meat, poultry, seafood, and vegetables.  Its distribution network spans across the Middle East, North Africa, Saudi Arabia among others.

Stellar Q2 Results

What drove the stock to new highs last week was the company’s stellar Q2 earnings report. Revenue set an all-time record of $2.9 million in Q2/19, an increase of 153% over the $1.2M reported in Q2/18. The company’s gross margin was approximately 15.4%, within the higher historical range for the current product mix; up 348 basis points compared to Q2/18. Net income reflected a profit of $2.2 million, primarily driven by the reversal of certain charges booked in the prior quarter related to the settlement of certain convertible notes payable and a gain realized on the extinguishment of certain other convertible notes payable during the quarter, both of which are beneficial to the Company’s current capitalization strategy. Verus CEO Anshu Bhatnagar said:

“The Q2/19 results provide more evidence that our growth cycle had already begun, even before our recent growth initiatives. We acquired Big League Foods in the last week of Q2/19 and our latest capital infusions were signed after the quarter end. Q2/19 should be viewed as a strong launch pad for even better growth in the second half of 2019. If you back out the non-cash stock-based compensation charges, we would have posted an operating profit in the quarter. So, we are right where we want to be as we begin our true growth phase.”

Big League Food Making Major League Moves

The first ice cream flavors from Big League Foods will be Bases Loaded – premium vanilla ice cream with thick swirls of caramel and quality chocolate pieces; Double Play – premium vanilla ice cream with chocolate chip cookie dough and brownie pieces; Grand Slam Sundae – premium chocolate ice cream with mini marshmallows, caramel swirl, fudge brownie pieces and almonds; and Vanilla “Beaned” – premium vanilla ice cream with specks of vanilla bean. These flavors will be shipped the second week of July and initially be branded under the Chicago Cubs, Boston Red Sox, New York Yankees and Philadelphia Phillies logos in their respective markets.

Verus has a distribution agreement to place Major League Baseball (MLB) branded confectionery products into approximately 2,500 locations in the New York (Yankees), Boston (Red Sox), Philadelphia (Phillies) and Chicago (Cubs) metro markets. Placement will be in independent convenience and corner stores as well as gas stations, including popular retailers such as 7-11, 76, BP, Chevron, Circle K, Marathon, Shell, and Sunoco. The products will include gummi candies and chocolate caramel baseballs. Verus CEO Anshu Bhatnagar said:

“There are far more retailers who sell candy than ice cream, but establishing a retail network always starts with that first essential piece of shelf space. In many locations, we have the chance to get sales from two different parts of each store, the candy counter, and the freezer section, increasing our revenue potential. We intend to replicate this kind of arrangement around the country as we stairstep our distribution to include all 30 MLB teams.”

Long-Term Outlook

What really has us excited about OTCMKTS: VRUS is the forward guidance the company gave. Verus has its largest funded backlog in Company history, currently in excess of $30 million for delivery in the 12 months following commencement of initial shipping schedules. The company is also looking at several M&A opportunities as well as an uplisting to NASDAQ or NYSE MKT. Verus CEO Anshu Bhatnagar said:

“This was a solid quarter, but I want to give everyone a sense of what is coming. In terms of guidance for the remainder of fiscal 2019, we expect our growth rate to accelerate in the next two quarters as our new funding is put to work, and our MLB-branded business and new international lines begin to ramp. Our ultimate growth rate will depend upon the timing of additional working capital, but we have great revenue visibility well into Fiscal 2020. We expect to maintain triple-digit growth through the balance of Fiscal 2019 and beyond. Today’s results are a precursor to that growth.”

Bottom Line

Currently trading with a market cap of $71 million, OTCMKTS: VRUS is an exciting name among small caps. With the potential that Major League Baseball offers Big League Foods, it’s no wonder investors are getting excited about Verus and pushing the stock to new highs. After delivering triple-digit revenue growth in Q1 and Q2 without Big League Foods, we expect Q3 to be a blockbuster quarter. We expect the VRUS bull run to continue making VRUS one of the year’s biggest winners on the OTC Markets.

We will be updating our subscribers as soon as we know more. For the latest updates on OTCMKTS: VRUS, sign up below!

Disclosure: We have no position in OTCMKTS: VRUS and have not been compensated for this article.

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Verus International Inc (OTCMKTS: VRUS) Remains A Top Pick
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