Thoughts on TAAT/TOBAF - Stocktrades Canada

With the context of having a solid underlying portfolio of blue chips and other safer, reliable companies, what are your thoughts on a speculative play on TAAT? I know it’s not the type of stock you’d recommend, but understanding that it’s an aggressive move (with money willing to lose), wondering what your initial thoughts on the company might be. Possibly a disruptor for the tobacco industry?

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Asked on April 17, 2021 10:18 am

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The company can definitely be a disruptor. However, right now I'm having a really hard time justifying the valuations. I mean this is a company with trailing twelve month revenue of $337,000 yet it's a near $300 million dollar company.

This is 857 times trailing sales. I just can't see this company ever showing the type of growth it would take to justify this type of valuation. And this is with the company's stock price cut in half. So at its peak.... 1700 times sales? Yikes.

I mean as you said with money to lose, you could try to ride momentum upwards if it were to come back. But even as a speculative investment, this one is so expensive that there is just very little chance it will ever justify this level of valuation. It's just a gamble at this stage. One that I wouldn't be participating in until it shows me a lot more than it has.

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Posted by Dan Kent

Answered on April 18, 2021 5:14 pm

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