A Fresh Look at ISW Holdings (ISWH)

One stock we have covered in the past that seems to be finally clicking on a new level is ISW Holdings Inc (OTCMKTS:ISWH). Hence, we thought it was a good time to take a fresh look at the stock as it ramps higher.

The name was interesting to us late last year when we saw the vestiges of clear turnaround in play in a very speculative penny name. It’s not normal to see a stock like this starting to talk about EBITDA profitability and major sequential quarterly growth data over multiple quarters. What was starting to become clear at that point is becoming even more clear now: this company is an emerging leader in the growing home healthcare space.

ISW Holdings Inc (OTCMKTS:ISWH) characterizes itself as a diversified branding model with a range of sector targets. And we wouldn’t be surprised to see some new dimensions emerge here – for example, ISWH management has talked about developing progress in the data center and alternative energy markets, and has already developed technology with a partner (Bengala) in the supply chain management space.

But the bread and butter right now is clearly centered on its growing role as home healthcare services provider.

Real Growth, Now

According to the most recent release from ISWH, “for the year ended December 31, 2019, ISW Holdings posted revenues of $527,151. Management notes that these results were achieved on accelerating sequential quarterly growth, with nearly half of those revenues appearing in Q4. Sequential growth in Q3 (versus Q2) was 26%. Sequential growth in Q4 (versus Q3) was 29%. The Company projects Sequential growth in Q1 2020 to come in at a new record level significantly outpacing Q4 2019 results.”

The path from here, if we extrapolate, puts a top line of over $2M in play for Q2 2021, and an annual top-line of over $5M for 2021 overall. With that in mind, consider how the company’s leadership summarized the recent trend to close out its most recent release:

“We are all in this together,” commented Alonzo Pierce, President of ISW Holdings. “As far as performance, we hope current and prospective shareholders understand that we are expanding to catch up with an accelerating flood of demand in our home healthcare segment. We are on pace for easily our best year in Company history. We are also on the verge of an announcement that will qualitatively bolster that trajectory, and we will have more details on that very soon.”

That last sentence suggests something big is on the way. That anticipatory sense is also probably helping to stoke the momentum in play right now.

We won’t speculate. But we can say that the stock is almost ridiculously underpriced at its current levels according to a price-to-sales valuation method if one thinks in terms of forward sales by extrapolating its sequential quarterly growth trend.

Since that trend has been holding up successfully for at least 4 quarters at this point, that makes for a reasonable basis for extending the momentum above current levels. With a float under 2.5 million shares, any kind of upside acceleration would have the potential to feed on itself.

The main point here is this: the crowd hasn’t really found ISWH yet. But it has posted strong growth over an extended period on the back of a valid structural theme, improving market positioning, and recent talk of a multi-state expansion.

The float is small, which could serve to ignite a scramble for shares as momentum picks up. Helping to fuel that possibility, the company has hinted at a major announcement to come.

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