One stock that could be interesting as a value play in the micro-cap space in 2020 is GD Entertainment & Technology Inc. (OTCMKTS:GDET). The company is primed to benefit from two different thematic value propositions: Crypto and CBD. In each case, we have a huge structural growth trend in place that has suffered from a cyclical downtrend as investors got too excited and we saw too many names jump into each space. But, in each case, we are obviously looking at something that will have the proverbial last laugh.
GDET isn’t just nominally involved in both spaces. We are talking about real operations and real growth very firmly in place in both crypto and CBD. For example, just in recent weeks (and clearly under the radar), the company has opened a physical CBD products store at a top-ten US mall and established a bitcoin ATM pilot program with its first fully operational location now fully active.
GD Entertainment & Technology Inc. (OTCMKTS:GDET) trumpets itself as is a company that focuses on high growth industries to fulfill a diverse selection of premium products nationwide. The company operates in two basic segments: cryptocurrency mining/services and CBD-based products. Both segments are currently doing real business and will likely contribute to significant revenue growth over the next 3-month and 12-month periods.
The main factor in valuing the company right now, overall, is its crypto mining farm, which is running fully-owned top-tier miners, with all-in costs at $0.065/kwh.
The company’s HyperDigital Technologies subsidiary is the Cryptocurrency ATM business, which aims to secure multiple MSB, money services business, licenses in order to host ATM units throughout the country.
The DreamCard subsidiary specializes in fully customizable and premium quality credit/debit cards. The Cryptocurrency cold storage market has been forecasted to reach more than $15 billion by 2025.
The CBD Segment is operated through its subsidiary, The Greenery (thegreeneryco.com). The low-down on the Greenery is that it has a popular Honey Hemp CBD recipe that has evolved in partnership with a local “homegrown” honey supplier located in Florida. It also offers a number of other CBD-based products for both human and pet markets.
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As noted above, GDET is active in both the crypto and CBD markets, which makes the stock a prime example of a multi-factorial thematic value play in the micro-cap space. This is especially important for smart money players because the micro-cap echelon of the market carries very real potential for one-day gains of 50%-200%, or even more in some cases. Hence, the upside reward in this marketplace is much bigger if your number comes up.
With both engines primed, this is a stock to watch. In each case, we are talking about the type of growth that has everyone at least subconsciously paying close attention.
Recent research from MarketsandMarkets calls for the Bitcoin ATM space to grow at a compound annual growth rate of nearly 55%, with total market size increasing from $6.8 million in 2017 to over $144 million by 2023. A recent survey conducted by CoinATMRadar.com found that, on average, operators of Bitcoin ATMs reported an average transaction volume of $30,000 per machine per month, with some operators reporting monthly average transaction volumes exceeding $100,000 per machine.
On the CBD side, according to research from MRFR, the global CBD market is estimated to register a CAGR of 125% from 2019 to 2026. The Brightfield Group joins in this appraisal, noting that 2019 alone is expected to show growth of over 900% as mainstream big-brand retailers – such as Kroger’s, Walgreens, Walmart, Rite-Aid, and others – begin to carry CBD products in plain sight of browsing consumers.
“Following an extremely positive experience at the kiosk level at Palisades Center, we have been approached by management at that location and given a priority access option to expand to an additional and larger space in another similar mall,” noted Anil Idnani, CEO of GDET. “The vast bulk of the potential market for CBD products has no idea that they need to navigate to some backwater e-commerce portal to buy CBD-based products. Instead, they are walking around popular shopping areas, browsing for something new and interesting to try – and CBD is that new and interesting possibility. The only way to capture any piece of that market is to be in front of them, out in the world.”
Earning a current market cap value of $1M, GDET is pulling in trailing 12-month revenues of $53K. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 160.3%. This may be a very interesting story and we will look forward to updating it again soon. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $GDET stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $GDET, either long or short, and we have not been compensated for this article.