Impression Healthcare Limited (ASX:IHL) is becoming a rock star of the pot sector.
Since our founding analysis on 7 March, IHL’s share price has quadrupled and the options have gone through the roof. Our $50k portfolio challenge has five-bagged to $265k (see position update below), with many readers also sitting on significant gains.
If you are new to our website, we plan to update the entire story today. If you’re an existing reader, while you probably have a good understanding of the business, there’s a few things you might find interesting, which the market is missing. That’s why we’ll go over some of our previous predictions (many of which have come true) and outline some new expectations.
In fact, considering the latest announcements and upcoming clinical trials, our low-end share price forecast has been revised upwards from 10 cents to 23 cents within the next six to 12 months. That estimate assumes broader markets hold up, mind you. Our best-case share price target is 33 cents over the same timeframe. Today we’ll argue why these share price forecasts are realistic, with a combination of fundamental and technical analysis.
Prior to sharing our latest thoughts on the company (the market is only just waking up to the full story and has much more to understand), we want to give you a position update and inform you on what’s happening with Trading For Millions these days. We’ll also share a standard disclaimer before diving into our latest thoughts on the company.
Small portfolio challenge ― position update
When we founded our blog on 7 March, we decided to start a small portfolio challenge alongside it. We weren’t sure how much money to play with at the time. But the blog’s goal has always been to turn a small amount of money into a million dollars for a bit of fun. So we decided to stick to a nominal amount of $50,000 to keep things interesting. The Trading For Millions portfolio is held in a nominee account for privacy purposes.
Here’s the latest position update, dated 4 August 2019:
The blog’s shareholding might not seem like much compared to your position. But we started this blog to help the trading community; we hold significantly more shares in other trading accounts. We haven’t sold any shares yet. And while some people call us baggies because we don’t own and talk about other stocks on the blog, why would we? Our $50,000 investment has turned into ~$265,000 in four months and that number is rising nearly every day.
The easiest thing to do is nothing and keep holding IHL.
If the share price gets overextended in the near term, we will sell some shares and retain a large core position for the long run.
But it’s not overextended.
Not in the slightest…
The market keeps thinking the share price will fall back. But we’ve heard the same story since it was at 2 cents. Everyone has missed the rally. There have been multiple chances to join it. We have (accurately) pointed out the main technical support and resistance levels on the blog and social media ahead of time. But few punters have bought the pullbacks, thinking this is a pump-and-dump and the rally will fail.
But we’re still making fresh highs!
If this was a pump-and-dump operation, the share price would be significantly lower by now. But it’s not. The market is merely waking up the story’s potential. Remember it was grossly undervalued when we started the blog. The latest share price appreciation has merely aligned the company’s valuation closer to its pot sector peers (we’ll go into more details below).
Put simply, with the market waking up to IHL being a pot stock (it wasn’t paying attention for several months), the share price has quadrupled accordingly. But that doesn’t mean it’s overvalued. In fact, as argued at length below, we believe the company remains significantly undervalued compared to peers today.
The market doesn’t get it…
It still thinks this is a pump-and-dump operation, rather than realising IHL is a real business, managed by an elite executive team with significant skin in the game. For example, without understanding anything about the story, certain social media influencers continue to portray the company as a dog ― even though they were saying the same thing at 2 cents!
The share price just hit 8 cents, folks!
IHL keeps announcing positive, unexpected news (some of which we predicted), which the market hasn’t really factored into the share price yet. So with the retail market scared of buying today, we’re confident that high-net-wealth and sophisticated investors are aware of the value proposition and are buying at these prices. When institutional investors become aware of the story (it hasn’t happened yet), we’ll likely see the share price double from current prices.
We think that’s merely a matter of time.
We understand some individuals are critical of our opinion (and possibly us in general) and believe institutions are buying today. But there’s no evidence of it happening. The volume just hasn’t been big enough and there haven’t been any substantial cross trades yet. Hopefully, as the story builds in the months ahead, this situation changes and the share price re-rates quicker than expected.
So while retail punters are worried about a pump-and-dump operation and are holding back buying some shares, it’s worth understanding that IHL’s valuation has just aligned with its pot sector peers. That’s all, folks. That doesn’t mean that it’s overvalued, or undervalued in this case. It simply means the company’s valuation has become reflective of a real pot stock.
The market isn’t joining the dots.
But it should…
This isn’t a pump-and-dump operation. The smart money has realised that IHL is a fully fledged pot stock and is in the process of valuing it accordingly. The share price has already quadrupled. The question now is: What valuation does the company deserve as a pot stock? As argued throughout this blog post, we suspect that it will be substantially higher than what it’s valued at today.
Eventually, the broader market will realise that things have changed for good. The company is no longer a penny stock hopeful. The days of sitting below 5 cents are likely long gone, unless we see a serious technical correction when the entire market falls. That’s why we could see a substantial re-rate higher in the share price soon, when the market wakes up to what’s happening here.
As we said, the company keeps announcing positive, unexpected news.
The story is looking better each day, so the share price isn’t overstretched by any means.
To reiterate, if the share price gets overextended, we’ll consider selling our position and focusing on other stocks. A 23-cent share price could be hit within six to 12 months. But with the company undervalued at current prices and the news cycle heating up, we expect to see significantly higher prices before selling any shares.
The bottom line: We’re putting our money where our mouth is and believe the easiest way to make money is by doing nothing today! IHL continues to be an absolute no-brainer hold and we’re confident we’ll see higher prices in the near term. Of course, while you got a snippet of our view above, we’ll argue why the company is undervalued in detail below.
But first, a quick update on Trading For Millions.
What’s happening with Trading For Millions?
As you know, we started our blog and social media accounts four months ago. We didn’t have the luxury of an existing reputation, social media followers, or a HotCopper profile at the time.
No one knew we existed.
Since our last blog post on 25 June, we have tripled our email list and attracted 1,300 unique visitors.
Thanks for your support.
Our blog might not seem massive. But considering we rarely post and didn’t exist on any social media platform four months ago, we are really happy with the growth ― especially since our readership has tripled since 25 June. That’s when we wrote our last IHL analysis and showed our portfolio had grown from $50k to $100k. That figure now stands at ~$270k.
IHL’s share price has been nothing short of amazing.
Today’s analysis is the most in-depth and highest volume piece we’ve ever written. We have included a comparison analysis table of every ASX-listed pot stock to help you understand the value proposition up for grabs. If you like our analysis, please share it around.
Remember, unlike others in the financial industry, we aren’t paid by companies to write research and we don’t sell newsletters. We are aligned with shareholders and have our on money on the line. You can see this by following our blog.
Trading For Millions has one mission: To offer a more informed view on companies we own for fun, which you won’t be able to read anywhere else on the internet.
IHL is the first of many stocks we will cover on the blog.
But we will only write when we have something worth saying.
Most financial websites pump out content because they are paid by companies to write research or sell newsletters. People will read them because they seem ‘legitimate’. But the editors tend to lack trading experience, regurgitate ASX announcements, and often have terrible track records.
We plan to build a successful track record in real time.
Assuming you like the companies we own and buy some shares alongside us (after doing your own research), we make money if you make money. The idea is to help you learn to recognise undervalued opportunities and become a better investor/trader.
For this reason, as you probably know, we are in the process of developing a trading course on the blog for FREE. If you go to the education part of the website, you will find three parts of the course ― Trader University ― available today. Trader University’s course content is discussed here. It focuses on mastering the basics of trading and having the right framework to succeed.
A common question we get today: When are you going to finish the course?
We know some of you are keen to read the entire course and we apologise for the delay. But mark our words: The final two chapters will be the best yet. We will make sure that’s the case. So it will be worth the wait.
Finishing the course is at the top of our to-do list.
Remember, while we’re focused on helping others understand the IHL value proposition for now, we eventually want to start another small trading challenge on the blog. The vision ― similar to the current small portfolio challenge on the Deep Value Investing blog ― is to turn a small amount of capital into a million dollars.
There are a million ways to make a million bucks in the markets.
The deep-value investing challenge focuses on identifying potential turnaround targets ahead of time on the blog. The portfolio has quadrupled, thanks to IHL. The second portfolio challenge will be different. The idea is to compound the portfolio towards the million-dollar mark ― the exact blueprint we showcased in Trader University.
We are eager to start the second million-dollar challenge.
But we won’t start it until we finish Trader University.
The bottom line: We’ll continue putting our money where our mouth is on the blog, researching and writing about companies we believe offer mouthwatering returns. We understand that we can’t please everyone. But we will do our best to help others. So we appreciate your support in sharing our blog links around to help us grow.
Here’s the standard disclaimer for your benefit, followed by our latest thoughts on IHL…
Standard disclaimer: Do your own research
This disclaimer section is extremely important, as we don’t have a financial license. So, unlike other financial sites, we choose to put it up the top. We want to hide nothing about our intentions.
You should perform your own research on every company profiled on Trading For Millions. Our analysis is skewed to the positive side, as we hold shares in each company on the blog. Trading For Millions will disclose whether we sell any shares in a company.
We don’t get paid by companies to write research. The incentive is to make good money from the stocks on blog and hold ourselves accountable.
If you invest alongside us, you do so at your own risk.
Remember, we own shares in companies previewed blog, across multiple accounts. For this reason, it’s quite possible, I could be selling every rally with my other accounts. But the above position update is a nominal amount for track record purposes to keep us accountable.
Although we could sell shares in our other accounts, if we earn a poor reputation for picking bad companies, we won’t have many readers! The live tracked portfolio holds us accountable. Plus, any deep value investment, we tend to look for massive triple digit gains.
Trading For Millions will only grow its readership by buying good companies with potential, where you can see the story play out in real time. The goal is to hit multiple homeruns in order to grow.
We’re also not in the business of providing formal stock recommendations or financial advice on Trading For Millions. That may change one day. But not anytime soon.
We are focused on building a track record for now.
If you want to know when to buy or sell a company, you’ve come to the wrong place. Start learning how to trade stocks by reading our free course ― Trader University!
To read the rest of the article, you need to sign up to our blog (for FREE). You can do this below. Becoming a member will give you access to our FREE trading course, Trader University. You will also receive email updates from our Deep Value Investing blog, documenting our live trading journey and the future small portfolio challenge.
Let’s get stuck into the company’s latest story…