Mogul Energy International, Inc. (OTC: MGUY) may be a nanocap company in size and share price, but it certainly has large-cap aspirations. In fact, as a solid player in the transportation and logistics sector, their ambition could turn to higher revenues faster than many expect. And lots of it. By capitalizing on and maximizing near-term revenue-generating opportunities, MGUY expects it can post $185 million in total revenues by 2025. That’s an over 164% increase from its current $70 million. And it could eclipse that mark, resulting from its transformative acquisition of the Flora Group of companies.
There’s better news- more than a surge in revenues is expected. Mogul also expects EBITDA to increase by 125% from its current $3.6 million to $8.1 million during the same period. That expectation does more than create a case for investors’ attention; it supports that MGUY share prices’ path of least resistance points higher. And appreciably so.
In fact, while MGUY’s 44% gain since last week is impressive, they could be the precursor to more significant gains ahead, especially with an already completed capital raise positioning MGUL better than ever to take advantage of growth opportunities in a red-hot logistics sector. MGUL is confident it can do more than provide value to the space; it thinks it can help transform it.
Mogul Energy Grows Through Accretive Acquisitions
That’s a bold mission. However, as an agile and adaptable company in an expanding logistics sector, MGUY could very well succeed by providing services many of its peers can’t. That distinction has already led to MGUL building an impressive client list that continues to get longer through industry relationships that understand its value from delivering “gold standard” services in a sector mired with mediocrity.
That difference matters, especially with clients entrusting MGUL to deliver up to millions of dollars worth of perishable and time or temperature-sensitive cargo, including floral, produce, plants, dairy, poultry, meats, and even dry high-value commodities. For MGUY, providing those niche transportation, logistics, warehouse consolidation, and distribution services has led to them growing faster than many might have expected. In fact, if MGUY reaches its revenue goal of $185 million by 2025, its market cap and share price could increase exponentially.
That’s not overzealous speculation. MGUY shares have traded as high as $0.42 during the past 52 weeks, 1642% higher than its current price. Considering a trading float of only about 11.1 million shares, news-based traction, which is expected, could send prices on a trajectory to re-claim that high. In other words, after assembling the pieces to contribute to breakout 2024 growth, its $0.032 share price on Monday presents more than a ground-floor investment proposition; it’s a bargain basement one. And that’s despite its recent 44% recent rally.
Accretive Acquisitions Fuel Revenue Increases
Still, as they always do, windows of opportunity close. Including the one exposing the MGUY valuation disconnect, which fails to appropriately appraise the entirety of MGUY, especially the value of its accretive acquisition of the “Flora” group of companies: Florida Beauty Flora, Inc., Florida Beauty Express, Inc., Floral Logistics of California, Inc., and Tempest Transportation, Inc. This acquisition establishes MGUY’s place as a contributing and valuable player in the specialized transportation space by providing refrigerated trucking and logistics services for companies in floral, plant, food, and other industries needing time-sensitive, temperature-controlled segments through the supply chain. Not just in its local market but nationally.
It does more. The acquisition of Flora fortifies an already strong presence in the refrigerated transport and logistics industries in the United States, enhancing Flora’s ability to transport and warehouse products nationwide and, as importantly, facilitate the entirety of the client’s supply chain cycle. In more specific terms, the acquisition made an already excellent company better. Flora and its subsidiaries are not new to the logistics space.
The company was established in the mid-1980s and has grown through opportunities presented to expand its business reach beyond its initial core focus of floral transportation. As a mature company with almost four decades of experience, the company is a virtual one-stop shop to supply primarily refrigerated long haul, regional and dedicated transportation, and logistical services for the floral and plant industry. And it’s not a small operation.
A 230 Truck Fleet Enables An Expanding Service Footprint
Flora currently operates and manages approximately 230 trucks and 320 trailers across Florida, Tennessee, and California. The Florida location is one of the largest cold storage facilities in the Southeast, with roughly 200,000 square feet of dedicated storage for fresh-cut flowers and produce. The company employs about 300 people, which it expects to double in size by 2025 to meet its forecasted growth.
To ensure that growth is profitable, the company has taken significant steps to maximize efficiencies and lower overhead by integrating new software operationally and in the fleet to do more than heighten its technological advantage; it’s designed to allow revenues to fall faster to its bottom line. That matters, especially with revenues expected to nearly double to $185 million within three years. And not from just current value drivers.
MGUY expects to continue its growth through an acquisition strategy that adds accretive revenues that benefit from a business model designed to maximize income. In other words, taking the steps to ensure revenues’ ultimate contribution is to increase shareholder value. They also plan to engage new credit facilities to expand their fleet of trucks and warehouses, simultaneously replacing older trucks and trailers with newer asset-light models. To make the most significant impact from a financial perspective, Flora’s information technology staff will focus on integrating automation and technology to reduce overhead through algorithms that will modernize its operations and expedite new fleet acquisitions into service.
Groundwork Completed Sets MGUY Up For A Breakout 2024
Combining assets with potential, MGUY is in a sweet spot of opportunity. And they can capitalize on changes to supply chain models that resulted from the pandemic. Those changes were needed, and although it took a global pandemic to get people to respond to that need, global logistics, warehousing, and distribution infrastructure industries have a new and better standard from which to serve. Those companies early to adjust to the changing logistics tide will likely benefit the most, including microcap MGUY, which, like the sector as a whole, could earn considerable new market share by providing specialized services to market segments needing cold storage and delivery services.
Indeed, MGUY is presented with an enormous opportunity. The Perishable Goods Transportation market opportunity is expected to reach $6.3 billion by 2026, resulting from the growing demand for organic, fresh foods and beverages, which has led valuations of home-delivery companies Doordash (NASDAQ: DASH), GrubHub (NASDAQ: GRUB), and Blue Apron ( NASDAQ: APRN) to surge since their market introductions. As they grow, so does their need for food and beverages, which triggers the need for companies like MGUY to deliver. Keep in mind that’s just the food and beverage part of the equation. The fresh flower business in the U.S. presents an over $35 billion market opportunity. And as companies like 1-800-Flowers (NASDAQ: FLWS) continue to expand their business reach, like other companies selling perishables, they share a similar interest- the need for additional inventory.
That need bodes well for MGUL and its subsidiary assets. And with a strengthened balance sheet, excellent management, and operating in a red-hot logistics sector, more likely than not, the path of least resistance for MGUY shares points higher. In other words, for those investors looking to capitalize on valuation disconnects in companies showing strong revenue growth and a commitment to making sure those revenues turn to profits, Mogul Energy is more than worthy of consideration; its disconnect may be a call to action.
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