Four Reasons Why EnWave Corp Looks Extremely Appealing Right Now

EnWave Corporation (TSXV:ENW – $1.01 CAD & OTC:NWVCF – $0.78 USD & Frankfurt:E4U – €0.65) offers industrial-scale dehydration technology for commercial applications in the food and pharmaceutical spaces. The Company’s Radiant Energy Vacuum (“REV”) platforms are becoming the new global dehydration standard, as they are faster and cheaper than freeze drying, and have better end product quality than both air drying and spray drying.

The Company reported revenue of $15.95 million for the fiscal year 2017, ended September 30, 2017, compared with $14.93 million in the comparable period last year, an increase of 7%. The 2017 result was the highest in the Company’s history.

Although this is an attractive result, judging by EnWave’s fourth quarter result, revenue is significantly picking up speed. During the fourth quarter of FY 2017, sales reached $3.63 million, up 44% compared to sales of $2.52 million in the same quarter of FY 2016. This result is due to the sharp rise in sales from Moon Cheese snacks.

While EnWave will continue to push forward in 2018 with more machine sales, technology evaluation agreements, and royalty agreements, there are four upcoming events that make EnWave look extremely appealing.

We expect a boom in cannabis-related machinery sales, as EnWave’s technology can substantially reduce costs for producers. In the coming months we should also find out more about the final Factory Acceptance Tests (FAT) at Sutro Biopharma.

In addition, we foresee continued distribution expansion for Moon Cheese. The Company is targeting to reach sales of over $10 million in Moon Cheese alone during 2018. A few months ago, distribution of the dried cheese snack was expanded to 2,000 Rite Aid pharmacy stores, 1,600 CVS stores, and 440 Targets in the United States. More recently, Moon Cheese also became available in approximately 70 Costco stores in the Midwest of the United States. Further expansion of Moon Cheese distribution is expected.

Moreover, during the summer of 2017, EnWave entered into a contract with the US Army Natick Soldier R&D Center to jointly develop low weight, high quality, nutritious field rations. Initial samples of REV-dried products were tested internally by focus groups, and the feedback was phenomenal. If things progress to the point where the U.S. Armed Forces decide that REV dried products should become available within their organization, then EnWave would work directly with a group of approved suppliers for the U.S. Armed Forces. This opportunity for EnWave is enormous, as potentially hundreds of thousands of men and women in active duty could be served Radiant Energy Vacuum dried rations.

We reiterate our buy recommendation for EnWave Corp. with a price target of $3.41, which is 237% above today’s stock price.

For important disclosures, please read our disclaimer.

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