Weak markets expose investment opportunities, and GPO Plus, Inc. (OTCQB: GPOX) stands out as a compelling one. Several factors support the bullish appraisal, including soaring comparative revenues, an aggressive plan to open its 1000+ retail sales locations in 2023, and a high-margin business model allowing revenues to fall faster to its bottom line. However, that's just part of the GPOX package.
GPOX is also penetrating key markets faster than expected, resulting from a game-changing "White Glove" service that could enable the company to open even more locations this year than initially planned. If so, the current GPOX share price could be a springboard rather than a pedestal. Frankly, given the tens of thousands of specialty retailers that make ideal clients for GPOX, such as convenience stores, gas stations, and smoke and vape shops, a continuation of the company’s growth trend appears probable.
That's not an overzealous expectation. Precedent shows that GPOX's Direct to Store ("DSD") business and service model benefits more than the company itself; it also drives revenues for clients by providing an opportunity to have a fully-managed "store within a store" whose risk-free returns offer a value proposition that may be too good to ignore.
An Impressive GPOX Products Arsenal
With over 1000 new stores expected to open this year, many clients are already taking advantage of what GPOX can offer. Still, while those openings contribute to GPOX's growth pace shifting into warp speed, it represents just a tiny fraction of the expansion opportunities in play. Supported by record-setting revenues, in-demand products, and expert management to direct growth, the more excellent news is that GPOX is better positioned than ever to seize these low-hanging opportunities.
That's happening now. The successful deployment of its new "White Glove" Direct to Store service is attracting significant retail interest. It should, considering GPOX does virtually all the work to create and maintain its brands' footprint. That includes providing point-of-sale displays, cases, and maintenance for its flagship brands, "The Feel Good Shop+" and "Mr. Vapor." These hands-on services are provided through its company-staffed "Mini Hubs," which are supported by Regional Distribution Hubs. GPOX's current Regional Distribution Hub is in Lubbock, Texas, and more are expected to come online this year to manage the anticipated surge in planned openings.
Brett H. Pojunis, CEO of GPOX, expects that will be the case, saying, "The success of our new service program has already prompted our retail customers to request additional product offerings. We are capitalizing on this demand by allocating all resources needed to roll out to 319 retail stores quickly and efficiently. With the introduction of our Mini Hubs, GPOX also has the opportunity to add other specialty retailers in that region as well as recruit outside sales reps and Independent Sales organizations (ISO's). Furthermore, GPOX receives valuable point-of-sale data, allowing us to optimize our product mix and introduce higher margin "white label products" such as our Yuengling Ice Cream Gummy line, increasing both top-line revenues as well as unit economics. Truly exciting times for our team members, retail partners and shareholders."
GPOX Differences are Advantages
GPOX's growth is no coincidence. It results from acknowledging feedback from its retail partners and creating and implementing a strategy to provide a best-in-class, state-of-the-art, technology-driven approach to direct store delivery. That's led to GPOX being ideally positioned to capture an extraordinary new retail-client opportunity by capitalizing on a niche market.
In fact, GPOX is targeting the 15% - 20% of the market that convenience stores can’t sufficiently address through their limited primary distributors. In other words, GPOX is alleviating the need for these stores to chase multiple sources for the remaining lifestyle goods ranging from nutraceuticals to sunglasses. By focusing specifically on the ranges of inventory typically sourced from numerous distributors and specialized vendors, GPOX may have identified a unique opportunity to emerge as a premier provider of these lesser-served product categories.
Here's why retail locations embrace the GPOX model: with its white-glove DSD service model, GPOX takes on the responsibility of ensuring shelves are stocked and inventory is replenished, relieving the retailer of that burden. The only role of the location manager is to sign a receipt for the order. Remember, most vendors at stores like Walgreens (NYSE: WBA), CVS Health (NYSE: CVS), and Rite Aid (NYSE: RAD) simply drop off pallets that employees have to deal with. That’s not the case when partnering with GPOX.
Once implemented, retailers and their employees quickly enjoy the benefits of additional revenues without much effort. And those rewards can be significant, with GPOX noting a lift in monthly sales per location activated from $580 to over $2,120. Currently, GPOX services approximately 570 stores across 12 states centralized in the Southwest and Midwest regions of the United States.
As noted, growth has continued to accelerate. The company has already identified 316 locations approved for its new program, with roughly 100 currently active. An additional 116 stores in Dallas, Texas, Austin, Texas, and Albuquerque, New Mexico, will be activated before the end of August 2023, followed by an expectation to open 103 stores in Wyoming, Kansas, and Missouri marketplaces by the end of October 2023.
Leveraging the Strength of Hub-Style Infrastructure
Of course, rapid expansion requires infrastructure. GPOX checks that box, too, with a hub-style framework for servicing locations. GPOX anticipates that a Regional Hub, like its one in Lubbock, Texas, can service between 1,000 to 1,500 retail locations. However, these Regional Hubs have some help: once a market gets established, GPOX opens Mini Hubs.
Typically consisting of a 1,000 to 2,500 square feet facility and 1 to 3 drivers, these Mini Hubs are set up once its anchor retail partners reach a number that makes opening one economically feasible. These deliver high touch, "white glove" DSD ("Direct to Store Delivery) service, ensuring excellence on all fronts. They directly support the "Region Hub" strategy, with the "Mini Hubs" located outside the 150-mile radius. When launched, a Mini Hub is assigned to GPOX's retail partners in the immediate area, typically involving 35 to 45 initial locations. Implementing this approach with two new Mini Hubs has resulted in over a threefold increase in sales and growth.
That’s not all; specific geographies can sponsor multiple Hubs. In fact, plans are to launch 5 to 7 additional Mini Hubs by December 2023 to reach a target of over 1,000 retail customer locations within the Dallas and Austin, Texas; Albuquerque, New Mexico; and Wyoming/South Dakota areas. After that, they plan to open its next Regional Hub. Expectations are that at least 116 new retail stores will be added to its sales channels, bringing its White Glove DSD service to around 216 stores.
Remember, each new location is an immediate revenue generator. Better still, it takes little time for each presence to become profitable. That advantage could put a fire under GPOX's share price, considering the high multiples given to companies in the food and retail convenience sector.
For instance, Performance Group (NYSE: PFGC) trades with a 29.17 P/E ratio. Other companies follow suit: Sysco (NYSE: SYY) sports a 24.10 P/E ratio, U.S. Food (NYSE: USFD) an impressive 30.87 P/E, and Unilever (NYSE: UL), while lower than the others, has a 16.06 P/E. (* P/E rations on 7/11/23, 1:53 PM EST)
Here's something else to consider. Those store openings aren't the only value drivers.
Distro+ and Feel Good Shop+ Add Value
There's more to support the GPOX investment proposition. Last year, GPOX announced the formation of DISTRO+, an operational division that aims to drive increased retail distribution. Additionally, the company announced its Phase One initiative focused on adding products and retail partners. That phase proved successful, as DISTRO+ entered into distribution agreements with brands, signed up retailers, and identified distributors they expect are ripe for acquisition. Those weren't the only milestones reached.
GPOX additionally secured a license agreement to create Yuengling's Ice Cream flavored recreational hemp products. Yuengling is a prevalent household name in the northeast and currently enjoying national expansion, boosting distribution into potentially thousands of retail locations. GPOX also scored a master distributor agreement with Tech Armor, selling screen protectors and mobile device accessories, which they plan on rolling out to retailers soon. Further, a Master Services Agreement was established with SurgePays, providing SurgePays fintech products and services to GPOX retail partners while facilitating the distribution of GPOX products through the SurgePays marketplace. Additionally, SurgePays has offerings that will enable GPOX to generate additional monthly revenue per store. There's more.
GPOX secured yet another master distributor agreement with Hempacco, which sells hemp cigarettes, smoking paper, and alternatives to nicotine tobacco products. Hempacco's products include Hemp Hop, a partnership with hip-hop icon Rick Ross and Rap Snacks founder and CEO James Lindsay, and Cheech and Chong licensed products. Additional influencer-driven products are expected soon.
On the acquisition front, GPOX purchased Nutriumph, a leading seller of nutraceutical and vitamin supplements, including their banner product Herberall®.
Another appreciable value driver is GPOX's "The Feel Good Shop+," a "store within a store" retail concept offering an extensive range of CBD and other hemp-derived cannabinoid products. The Feel Good Shop+ provides consumers a comprehensive range of hemp-derived cannabinoid products, including Delta-8, HHC, and other leading products from trusted companies like Hempacco, Kill Cliff, Canopy Growth, and CaliGold's Flavorz. Consumers will be able to find all of their favorite products in one place, and in a segment that already presents a multi-billion rev-gen opportunity, these placements could contribute significantly to GPOX’s 2023 initiatives.
Seizing an Opportunity at Ground Floor Prices
All indicators, especially performance, indicate that GPOX is shifting from hyper- to warp-speed growth. And at current levels, the stock is ripe for immediate consideration, noting the intrinsics alone justify a significantly higher share price. And those are just a part of the whole of GPOX.
Factoring in the inherent potential, which targets billion-dollar markets, the valuation disconnect is more than too wide to ignore; it's a call to action, supported by GPOX having what most peer-valued companies don't: strong partnerships, licenses, expanding distribution networks, and a product portfolio able to generate enormous revenues at excellent gross margins, especially for their industry.
All told, at roughly $0.15 a share, GPOX stock is more than a bargain; it's at ground floor levels. Thus, while the broader markets search for a consistent direction, investors looking for value in fast-growing companies with an actionable and accretive growth plan need not look past GPOX. It has the assets, plan, and management to transform an ambitious 2023 agenda into significant revenues. With the year half over and the guidance given, that could mean more good news is in the queue. Trading ahead of it may be wise.
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