While this company is straightening out its financial snafu, the shares are trading at bargain levels and analysts are predicting 30% annual growth over the next five years for the company.
Amyris, Inc. (AMRS)
From Ian Wyatt’s Million Dollar Portfolio
The shares of Amyris, Inc. (AMRS) have been bobbing back and forth between a small loss and a small gain.
The crux of the problem is that a material error regarding certain debt payment obligations has been identified, in that a significant portion of its payment obligations hadn’t been recorded as liabilities. How you make a mistake like that is a bit beyond me, but the result is that Amyris has to re-audit its financial statement for 2017 and find a new auditor for its fiscal 2018.
Amyris has appointed one of its external consultants as its interim CFO while it sorts this mess out and last month appointed Macias Gini & O’Connell LLP (MGO) as its new accounting firm. So far, it’s tough to tell how much progress MGO has made in its auditing process, but it’s expected to complete its work either late this year or in early 2020.
Until then, it’s likely that Amyris’s shares will drift along until this mess is put to bed.
The good news is that while Amyris’s previous accounts may have left something to be desired, its business is performing well.
The company is poised to launch its new line of clean baby skincare products called Pipette. The new line will include eight products and will be available at Walmart and on Amazon on day 1. The launch is also coming on the heels of Johnson & Johnson getting slapped with more than 15,000 lawsuits after it was found that its baby products allegedly contained asbestos.
It’s not hard to imagine why parents wouldn’t want to slather their kids with cancer-causing fire retardant, so that’s bad news for Johnson & Johnson. However, that’s great news for Amyris since it means that a lot of parents are looking for new baby products.
Its new pure cane sweetener—a brand new, 0-calorie sweetener which, ironically enough, is made from sugar—will also be dropping in the U.S. very soon. Widely hailed as the best “artificial” sweetener out there (how artificial can it be if it’s made from sugar?), most consumers who complain of artificial sweeteners having an “off” taste don’t have that issue with pure cane.
As a result, it’s expected to be a huge hit with consumers and will probably make a splash with commercial food makers making low-calorie foods that don’t taste low-calorie.
Those launches, along with Amyris’s CBD business, are expected to give revenues a big boost.
Management expects to bring in $150 million this year and revenues could approach $300 million in 2020.
That isn’t likely to knock the company into profitability in the near-term. It reported a net loss of $3.05 per share last year, but it will go a long way towards closing the gap.
As revenue grows and the account issue works towards resolution, I expect investors to warm to the company and its innovative approach to all-natural ingredients.
Recommended Action: Buy Amyris under $10.
Ian Wyatt, Ian Wyatt’s Million Dollar Portfolio, www.wyattresearch.com, August 2019