Last week, Alkame Holdings, Inc. (OTC Pink: ALKM) announced signing a long-term contract with Aladyn Protection Systems, LLC, to supply its new Personal Protection Equipment (PPE) product line. The deal could become a long-term value driver for ALKM and be a catalyst for growth in the back half of the year. It's also the latest in a series of positive announcements.
Aladyn is a major wholesale distributor of personal protective equipment (PPE) specializing in serving the travel and hospitality industries, with a logistics center located in Miami, Florida. Aladyn's purchases of PPE inventory from Alkame are expected to ramp up under the deal, with the scheduled order size doubling every ten weeks to reach a target of $1 million in cumulative sales from Alkame in the first year. Sales are likely to remain constant into 2022.
The deal came after ALKM capitalized on a substantial market opportunity. As the pandemic caused economic distress throughout 2020, Alkame, and its subsidiaries, quietly changed their focus to supplying high-quality personal protective equipment (PPE) for first responders and the medical sector. Although securing licensing, compliance inspections, certifications, and formulations took time to complete, the strategy took root with ALKM initially awarded PPE sales to the State of Oregon. As the year went on, Alkame secured a Canadian distribution partner for PPE and provided the required information and documentation for export. Exporting these high-demand products could generate exponentially more revenue later this year and well into 2022.
In fact, ALKM's focus on the PPE sector should be recognized as a long-term opportunity and one that complements Alkame's regular co-packing market, which is expected to enjoy a revival in revenues as COVID-19's economic impact fades. Normalized markets should equate to higher sales.
The excellent news is that there is depth to ALKM's product pipeline. And one of its most promising product lines targets the massive CBD market.
Alkame Holdings is Looking Stronger than Ever
In April, ALKM introduced a new line to its flagship product. In doing so, Alkame Holdings has taken a big step toward expanding its revenue stream with the planned release of its All-New Sugar-Free EVERx CBD Sports Water. The specialty water would be sold alongside the already-available EVERx CBD Sports Water, which generated around $2 million in sales last year. With a new sugar-free variety set to hit the market, the drink has the potential to reach an even larger audience.
As shoppers stay "carb aware," sugar-free alternatives to products like Monster Beverage (NYSE: KO) are beginning to earn a sizable share of shelf space, with even Monster themselves giving more focus to sugar-free formulations. The trend especially makes sense for EVERx Sugar-Free CBD Sports Water, as it retains all of the advantages of its initial recipe while lowering calories and eliminating unnecessary carbohydrates. With these changes over the initial formula, it's expected that the reachable market for EVERx CBD Sports Water will expand even further to include the carb-conscious, those watching their calories, and even those who must watch their sugar intake for medical reasons.
The new product further extends the company's partnership with Puration, Inc. (OTC PINK: PURA), a long-time partner who was instrumental in creating and bringing the original EVERx CBD Sports Water to market. What's more, the team is already collaborating on new CBD-infused products outside of EVERx, with another product announcement expected shortly. Investors could expect stock valuations to jump substantially following an announcement, especially from its strengthening of agreements with its distribution and marketing teams.
A New Facility Brings New Possibilities
ALKM is also working with another company that can bring logistical and industry expertise to the table. According to Alkame, North American Cannabis Holdings, Inc. (USOTC: USMJ) joined the team along with PURA to help with the market introduction of Sugar-Free EVERx CBD Sports Water. USMJ brings solid experience in the CBD sector, and with its familiarity with specific distribution channels, can help ALKM optimize the product launch.
Investors should also keep in mind that ALKM already has a robust distribution network in place, which could expand both their product line and consumer base. Although the stock may have been floating at sub-penny prices, the company has been working hard behind the scenes to complete its new West Coast Co-Packer factory. The new facility will nearly double production capabilities through higher-speed equipment, and the ramp-up in production rates alone should result in a considerable boost to this year's revenues.
Aside from the additional space and capacity, the new production location would also allow ALKM to improve its third-party health inspections beyond what it can currently do. Even better, the Gervais facility enables ALKM to seek one of the most critical and highest-rated compliance certifications available. This certification would open the door to substantial growth, enhance relationships, and open up new markets for businesses looking for a distribution and sales channel partner.
Moreover, ALKM has detailed a multi-channel distribution strategy with a direct-to-consumer sales model, which will be implemented this year. This opportunity is a product of the company's acquisition of DistributorCorp and will enable it to supply sanitizer and other PPE products to national clients through the internet. Those products fall under the company's non-hemp-related category, including its Alkame brand of premium oxygenated alkaline filtered water. The company is currently working to obtain export approvals for some of its popular consumer brands and goods. If those permits are earned, share prices at these levels present a massive value opportunity.
Moreover, the sum of its parts should already equate to a much higher valuation.
2021 Brings Expansion Opportunities
In fact, one could argue that Alkame Holdings is now in the best operating position in its history. A recent shareholder update detailed how ALKM responded to the unprecedented economic challenges of the pandemic and how its CEO positioned the company to weather the storm that was 2020. Most importantly, he mentioned that despite the severe economic disruptions, the company's supply and distribution systems are still operational. Better still, he noted that the steadily improving economic conditions are finally providing some relief to retail locations, which bode well for ALKM product sales in the near term.
Therefore, ALKM stock should be measured on current events rather than how it fared throughout the pandemic-plagued market. In fact, Alkame Holdings has done an excellent job of enhancing its capabilities, placing itself in a strong position for rapid growth thanks to upgraded infrastructure, innovative products, and synergistic alliances.
ALKM Poised for a Breakout 2021
No doubt, navigating through the pandemic's economic roadblocks was an unprecedented challenge for businesses. While several companies struggled to keep up, others took advantage of the downtime to rebuild and develop new strategies to combat a changing market environment. The latter is well-exemplified by Alkame.
Alkame made it through the pandemic, and its distribution subsidiary helped provide products such as sanitizer and PPE that help prevent the spread of COVID-19. This social contribution happened simultaneously to the company developing innovative tactics to succeed in an evolving market. With all of this considered, not only is ALKM a survivor, they are now stronger than ever.
The good news is that, as COVID-related restrictions across the country loosen, ALKM stock could be poised for a rally as its goods and services re-enter normalized market channels. Analysts are in agreement that pent-up demand for consumer goods could result in one of the most amazing snap-back rallies in history, with increased consumer spending likely to benefit sectors across the board.
Alkame Holdings' decision to build up instead of break down this year could pay off handsomely. And with several expected company updates on the way combined with ALKM's facility upgrades that support more significant volumes... record production and record-setting revenues could come sooner rather than later. At current levels, ALKM could be serving up a compelling investment opportunity.
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