GPO Plus, Inc. (OTCQB: GPOX) GPO Plus, Inc. stock presents a value investment proposition too good to ignore. That's said with supporting reason, including that GPOX is already scoring appreciable revenue growth from its current 570 stores served. While that value is going unnoticed within its current share price, a more significant gap is exposed, knowing that GPOX is on pace to open over 450 stores by the end of this year.
In other words, trading at roughly $0.18 on Monday, GPOX stock at current prices trades below the ground floor; they are basement-level prices detached from any measure of appropriate appraisal to a company growing at warp speed. Know this, too. More than store openings support the bullish sentiment.
Revenue growth is also a contributing factor, with GPOX monetizing its Distro+ and The Feel Good Shop+ assets and tapping into an enormous convenience store market opportunity with its unique "White Glove" DSD - Direct to Store distribution – service, expected to deliver upwards of $7 million in revenues in the new fiscal year 2024. And that's without opening a single additional store or closing any additional accounts. GPO Plus, through its current 570 stores across 12 states, generates per-location revenues ranging from $400 on the low end and over $2100 monthly for stores serviced with DISTRO+ white glove service.
GPOX Value Drivers Are Real-Time
While that growth pace is impressive for any sized company, it's especially so when considering GPOX is meeting its objectives while still being classified as a nanocap. But intrinsics aren't the only considerations. GPOX is accruing further value through partnerships, licenses, expanding distribution networks, and a product portfolio arsenal able to generate substantial revenues at excellent gross margins.
Combined, it's a simple calculus to conclude that GPO Plus is in its best position ever to capitalize on and maximize near-term revenue-generating opportunities. In fact, performing assets, combined with those expected, could make 2023 more than a breakout period; it could be record-setting.
That's not an overly bullish presumption considering that GPOX is penetrating key markets faster than expected, resulting from a game-changing "White Glove" service that could lead to GPOX opening even more locations this year than initially planned. If so, the current GPOX share price could be a springboard, not a stairstep to higher prices. 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, breaching that 1000-store level and recording the revenues associated may be more than likely; it's probable.
Again, not an overzealous presumption. 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 revenue-generating proposition that may be too good to ignore. Many retailers aren't.
With over 1000 new stores expected to open this year, it's evident that many are already taking advantage of what GPOX can offer. Still, while planned 2023 openings contribute to GPOX's growth pace shifting into its highest gear, it represents just a tiny fraction of the expansion opportunities in play. And GPOX's "White Glove" service could provide the fuel to surge well beyond that mark.
Rapid Expansion Facilitated By "White Glove" Direct To Store Service
That's evident from successfully deploying its new "White Glove" Direct to Store service, 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's Surging Growth Facilitated By Being Different
GPOX's growth is facilitated by its ability to do things differently. Specifically, GPOX acknowledged feedback from its retail partners and created and implemented a strategy to provide a best-in-class, state-of-the-art, technology-driven approach to direct store delivery. That led to GPOX being exceptionally well-positioned to capture an extraordinary new retail-client opportunity by capitalizing on unique service and product strengths and targeting the 15% - 20% of the market 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 and everything in-between. By focusing specifically on the ranges of inventory typically sourced from numerous distributors and specialized vendors, GPOX believes it has found a formula that serves a unique opportunity to engage as a premier provider of these lesser-served product categories.
There are reasons why retail locations embrace the GPOX model. Foremost is that 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) 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 $400 to over $2,120. Currently, GPOX services approximately 570 stores across 12 states centralized in the Southwest and Midwest regions of the United States.
That store count, as noted, is expected to swell. GPOX said it has already identified 316 locations approved for its new program, with roughly 100 currently active and an additional 116 stores in Dallas, Texas, Austin, Texas, and Albuquerque, New Mexico, expected to be activated before the end of August 2023. Following that, GPOX expects to open 103 stores in Wyoming, Kansas, and Missouri marketplaces by the end of October 2023.
Hub-Style Infrastructure To Support Rapid Growth
That rapid expansion requires infrastructure, a box GPOX checks 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. As important, 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. Fast, too, since 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 30.03 P/E ratio. Other companies follow suit: Sysco (NYSE: SYY) sports a 24.32 P/E ratio, U.S. Food (NYSE: USFD) an impressive 31.53 P/E, and Unilever (NYSE: UL), while lower than the others, has a 15.74 P/E. (* P/E rations on 7/17/23, 2:22 PM EST)
Here's something else to consider. Those store openings aren't the only value drivers.
Accretive Contributions From Distro+ and Feel Good Shop+
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, GPOX 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. There's more. 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. SurgePays offerings will also enable GPOX to generate additional monthly revenue per store. There's more value to appreciate.
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®. That fits nicely into another GPOX value driver, GPOX's "The Feel Good Shop+," a "store within a store" 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 tolled, the sum of GPOX's parts exposes an investment proposition worth seizing. And unlike many nanocaps with ambition ahead of substance, GPOX shows tangible proof of its accelerating growth. Remember, the company expects to post upwards of $7 million in revenues in fiscal year 2024. And that's the low estimate. With over 400 new stores planned to open by the end of this year, that target could be breached.
In fact, even posting the low end of precedent would add over $2 million to forecast revenues. Considering the multiples given to others in its sector, GPOX stock could increase appreciably in the coming weeks and quarters. Indeed, there's a disconnect between assets, inherent potential, and share price. But that's not entirely bad news.
The gap does present an opportunity for those appreciating under-the-radar investment opportunities. But while GPOX may lack investors' eyes today, that's likely to change. As they always do, strengthening fundamentals and rapid revenue growth tend to attract the masses. In other words, with imminent updates likely, the GPOX window of opportunity could close sooner than later.
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