Toast to Eastside Distilling

05/05/2017 2:50 am EST

Focus: STOCKS

Nick Hodge

Founder and President, Outsider Club

For those comfortable with the more speculative nature of low-priced stocks, Nick Hodge — editor of Nick's Notebooks — looks at one of his favorite recent ideas, a company in the liquor and distilling industry.

Eastside Distilling (ESDI) reported full year 2016 gross sales of US$3.0 million, an increase of 31% over 2016. Total case shipments increased by 53% to 15,596 cases. 

That means Eastside, with a $12.5 million market cap, is only trading at approximately 4X sales – well below the valuation multiple paid in recent liquor deals. And sales will grow similarly this year. 

Eastside announced in April it is expanding into Alaska with its first order there. More importantly, it just announced the acquisition of Big Bottom Distilling, a fellow Oregon distiller that brings with it several award-winning lines of super-premium gins, whiskeys, brandies, rum, and vodka. 

Big Bottom’s current sales of about $200,000 annually come primarily from Oregon, California, and Illinois. Eastside will leverage its growing sales network – now in nearly half the states plus Canada – to increase Big Bottom’s sales. 

Eastside made the acquisition for 84,286 shares. We’re up about 15% on our two placements at US$1.30. I expect much more as it’s still very early in this story.

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