Faris Sleem, editor of The Bowser Report, is a leading specialist in low-priced, micro-cap stocks; indeed, his latest featured recommendation had 2018 revenues of just $3.8 million.
Trxade Group (TRXD) owns and operates a business-to-business, web-based marketplace focused on the pharmaceutical industry. Its platform enables commerce among buyers and sellers of pharmaceuticals, accessories and services, including over 20,000 branded and generic drugs.
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Trxade's competitive advantage is a system of proprietary databases and algorithms that identify products that are likely to be in short supply.
By recognizing the lack of supply, TRXD is able to offer these products at the lowest possible prices, helping reduce the pharmacy’s total annual purchase costs by 7-10%. The company currently has over 10,000 pharmacies on its network and intends to go after all 24,000 independent pharmacies.
Its top competitor only has 1,200 pharmacies and does not run its own algorithms. By using its own algorithms, Trxade is able to maintain low margins and consistent revenues. The company is also adding over 100 pharmacies per month.
There’s still plenty of market share up for grabs, and as the pharmaceutical industry gets more competitive, TRXD will benefit. The October 2018 acquisition of Retail Specialty Pharmacy expanded Trxade into the business-to-customer (B2C) market and added $2.5 million in annualized revenue.
The recent acquisition makes the current market price an appealing entry point for Trxade. With top line results improving and the push into a new market, there’s plenty of room for growth.
While profit margin percentages are down, management sacrificed short-term profits for long-term growth by taking more risks. TRXD is an undiscovered market leader that should continue to capture more market share in the years to come.
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