US-focused small caps soldier on despite supply chain disruptions
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The ASX small caps focused on the COVID-hammered US are feeling the pinch but are still optimistic about their endeavours.
The US has the world’s most COVID-19 cases, surpassing 3 million cases earlier this week and 130,000 deaths.
One stock doing better than most during the pandemic is business to business candy supplier Candy Club (ASX:CLB).
The company operates a candy subscription service as well as a B2B arm which places its sweets in speciality retailers, such as high-end fashion or food outlets.
Yesterday it told investors revenue in the June quarter came in 66.6 per cent higher than the March quarter at $US2.3m ($3.3 million).
Like its peers in the food sector, Candy Club did not have to shut down completely during the pandemic. But some of its customers falling in the “non-essential” category did have to close temporarily.
Candy Club’s chairman, Melbourne business identity James Baillieu, was pleased with the results telling Stockhead the metrics were evidence the company had a winning strategy in place.
But he believes revenues would have been even better had it not been for COVID-19.
“Food is an essential service in the US, and candy is a food, and so food is protected from COVID lockdowns,” Baillieu said.
“A lot of non-food retailers have had to shut during COVID. So we have been adversely affected. The results would’ve been better if it was not for COVID.
“But there is a core of retailers — grocery retailers, supermarkets and online retailers — that are open and that’s who we’ve been selling to in the last quarter.
“As Main Street comes back online — we don’t know when that will be and no one knows when that will be — we’re expecting a big uplift from that.”
Despite yesterday’s rise the stock remains some way off its February 2019 IPO price of 20c.
Candy Club (ASX:CLB) stock chart:
But Baillieu, who came on as chairman last September, says Candy Club has been improving for several months even if it hadn’t always been reflected in the share price.
“I don’t celebrate a day when we go up 10 per cent or 20 per cent, I focus on the operational performance of the business and the share price takes care of itself over time,” he said.
One stock that was in the hand sanitiser game long before COVID-19 hit was Holista Colltech (ASX:HCT) — but of course it took the pandemic for shareholders to realise it could be a money-maker.
Holista’s product, NatShield, is 99.99 per cent effective against COVID-19 surrogate feline coronavirus.
This morning the company told shareholders COVID-19 restrictions disrupted supply chains globally. Additionally, it pointed to “race related unrest” as an extra inhibiting factor in the US.
Nonetheless it said it was working to ensure it was ready for the North American winter season.
When your operations are online, staying open during COVID-19 becomes far easier.
Software stock LiveTiles (ASX:LVT) told shareholders it had seen increased uptake in its products globally, including in the US.
While professional sports were suspended, any negative affect was cancelled out by the continuation of horse racing and the closure of casinos leaving punters with little other choice but to go online.
This morning the pair revealed they had joined forces to offer horse racing odds in New Jersey after both companies announced stand-alone deals at individual tracks earlier this year.