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One penny inventory I just like the look of is Revolution Magnificence Group (LSE: REVB).
Not all small-caps can flip into market leaders or blue-chips. Many do fail as a result of a scarcity of monetary may, or are taken over by greater companies.
Nevertheless, I reckon Revolution may see itself rising, and offering me with some juicy returns. Right here’s why.
Magnificence is within the eye of the beholder
Revolution is a magnificence and private hygiene enterprise that sells a number of manufacturers. It does this direct-to-consumers, and by way of wholesalers too.
The shares have meandered up and down like an thrilling curler coaster I used to take pleasure in once I was (a lot) youthful. They’re presently buying and selling for 24p, which is strictly the identical degree as presently final 12 months. Nevertheless, the shares have surpassed the 100p mark beforehand, in 2022, to be particular.
Revolution has been marred by boardroom politics in current instances, which has most likely held the shares again. The departures of high-level execs, and the rising stake within the fast-fashion enterprise boohoo, has been problematic, in my eyes.
With all this occurring, I’m not shocked that institutional traders need to see the lay of the land in respect of the agency’s management and course. Plus, full-year outcomes for the interval ending February 2024 haven’t been launched but.
The funding case
Persevering with the theme of points and dangers, boardroom instability is a fear. This will affect the course of the enterprise, which may harm operations, earnings, and investor sentiment. That is one thing I’ll preserve a detailed eye on.
Subsequent, the sweetness market could be very aggressive, and the margins aren’t all the time the biggest, particularly with present inflationary pressures too. As I referenced above, a bigger participant could take the enterprise over, or simply outmaneuver it completely into non-existence.
Nevertheless, it’s not all doom and gloom, in my opinion. Forecasts point out the agency’s first worthwhile 12 months since preliminary public providing in 2021 is on the playing cards. This might be big for the enterprise, and shares. Nevertheless, I’m aware that forecasts don’t all the time come to fruition. Plus, the agency possesses an honest trying stability sheet, which is all the time constructive for small caps.
Subsequent, the enterprise has managed to develop an incredible footprint regardless of the actual fact it hasn’t been round a very long time. This features a huge geographic footprint, in addition to key wholesale relationships.
Lastly, from a normal perspective, the sweetness market is a burgeoning one which exhibits no indicators of slowing based on knowledge large Statista. This might be excellent news for the enterprise and its development aspirations.
What I’m doing now
Wanting again at current occasions, the final panorama of the market, in addition to historic share worth efficiency, I’m buoyed by Revolution. I reckon there’s potential for this inventory to climb a lot larger.
I’d be keen to purchase a small variety of shares at simply 24p per share once I can and see what occurs. I’ll be marking my calendar for full-year outcomes, and hope boardroom unrest is now a factor of the previous!
