Q: Hi there, is Covalon a good turn around stock here? Would you be a buyer at these levels? Thanks!
5i Research Answer:
COV has more than doubled this year, but is still down 70%+ from levels of six years ago. It has some cash and revenue, but sales are still below 2017 levels. It has lost money in five of the past six calendar years. Cash flow has been negative for three years. Recent management changes have been accepted well, and insiders still own 35% of the company. Revenue and margin both increased in the recent quarter, with sales up 16%. At $55M market cap it is still very small and risky. We would like to see positive cash flow on an annual basis before getting too excited here. For now, we would be on the sidelines.