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Wednesday, October 21, 2020

Giggles N Hugs Inc (OTCMKTS:GIGL) Shares Break Out Again

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Giggles N Hugs Inc (OTCMKTS:GIGL) is a stock on which we’ve been extremely bullish in our recent coverage. The concept for the company is a family-friendly restaurant with health-conscious foods and an upscale atmosphere that includes a dedicated children’s play area. As the company pushes out, exposure is going to become a key to unlocking a next level wave of growth, which we think will likely come through a transition to a franchise model.

The stock recently broke out again, and has already run another 35% higher since our last update. While near-term momentum may be somewhat exhausted, the company appears to have a finger on the pulse of its branding needs with its recent move to form a multi-faceted partnership with Jillian Michaels, the foremost fitness expert and renowned life coach. “Through the partnership, Michaels will become one of the largest shareholders in the company and the global brand ambassador, bringing her wealth of experience in building

Giggles N Hugs Inc (OTCMKTS:GIGL) frames itself as “the first and only restaurant that brings together high-end, organic food with active, cutting-edge play and entertainment for children.”

According to company press materials, “Giggles N’ Hugs is the first and only restaurant that brings together high-end, organic food with active, cutting-edge play and entertainment for children. Every Giggles N’ Hugs location offers an upscale, family-friendly atmosphere with a dedicated play area that children 10 and younger absolutely love. We feature high-quality menus made from fresh and local foods, nightly entertainment such as magic shows, concerts, puppet shows and face painting, and hugely popular party packages for families that want to do something special.”

Every Giggles N’ Hugs location offers an upscale, family-friendly atmosphere with a dedicated play area that children 10 and younger absolutely love. The company gears itself toward allowing Parents to be able to eat and relax while “the kids have the time of their life.”

The company prides itself on featuring high-quality menus made from fresh and local foods, nightly entertainment such as magic shows, concerts, puppet shows and face painting, and hugely popular party packages for families that want to do something special.

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As we noted above, GIGL is advancing on strong branding activity, bringing on Jillian Michaels at a point when the company has already established some organic traction, with sales ramping up between 20-30% on an annual basis for the last few years. But that could potentially go into overdrive if and when the company starts to add locations or leap into a franchise model.

That said, the move to franchising cannot be rushed. It’s a bit like a fruit: you have to let it sufficiently ripen, in terms of brand awareness, before committing resources to packaging that brand for franchise establishment. That’s exactly why we like the move to bring in Michaels. Furthermore, we would imagine there is room for more such relationships when there is a good fit.

The chart shows 59% during the past month in terms of shareholder gains in the listing. The situation may be worth watching. GIGL has evidenced sudden upward volatility on many prior occasions. What’s more, the stock has seen an influx of interest in recent trade, with its recent average trading volume running 65% over the long run average.

Traders should note this as important given the stock’s tight trading float of just a tad more than 10M shares. Traders should not overlook this combination, as a restricted trading float and a jump in trading volume can crimp supply and push share prices higher.

Now commanding a market cap of $14.1M, Giggles N Hugs Inc has a store ($101K) of cash on the books, which stands against about $811K in total current liabilities. GIGL is pulling in trailing 12-month revenues of $3.1M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -30.3%. This may be a very interesting story and we will look forward to updating it again soon. For continuing coverage on shares of $GIGL stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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