FAANG getting crushed, where should you be?

Here is a defensive play you might not know about in the food manufacturing, importing and distributing sector.

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While we wait for the Georgia Runoff elections to conclude it appears Warnock will win leaving Perdue Ossoff still in the wind with about 1,400 absentee ballots due in by Friday’s deadline. 

In the meantime, FANG, a good indicator is getting crushed pre-market Wednesday. 

Facebook (NASDAQ: FB) – down 3.3%

Apple (NASDAQ: AAPL) – down 3.1%

Amazon (NASDAQ: AMZN) – down 2.3%

Netflix (NASDAQ: NFLX) – down 2.5%

Google (NASDAQ: GOOG) – down 2.6%

Here is a defensive play you might not know about in the food manufacturing, importing and distributing sector.

Take a look at Global Diversified Marketing Group, Inc. (OTC: GDMK) – A Quick look at some Stats: 

9 months of 202020192018
Sales$1,260,539$1,317,0921,161,995
Growth28% – annualized13%
Gross Margins593,832 – annualized371,002397,617
Shares Outstanding13,127,200
Market Cap$5,907,240 

Global Diversified Marketing Group, Inc., (OTC: GDMK) operates out of Island Park NY and is a global multi-line consumer packaged goods (“CPG”) company with branded product lines.  They are a food and snack manufacturer, importer & distributor in the US, Canada, and Europe offering gourmet snacks including Italian Wafers & Croissants, French Madeleines, Wafer Pralines, Macarons and others.  

GDMK just announced “very strong demand” for the company’s product on Amazon.com in 2020.  In efforts to accommodate the demand, the company has engaged a firm to launch a new eCommerce site.  The company feels that they can “efficiently build a 7-figure” digital business. 

The company also recently reported “Record Quarterly Revenue”, up 82% over prior year levels. 

HighlightsandResultsforThreeMonthsendedSeptember30th, 2020Compared to the Same Three Months Ended September 30th, 2019

  • Revenues were $667,237, an 82% increase, as compared to $366,354 for the same period in 2019
  • Gross Profit Margin was $246,539, a 71% increase as compared to $143,997 for the same period in 2019
  • Gross margin percentage was 36.9% compared to 39.3% in the 2019 period
  • Net profit was $59,144 compared to $14,126 in the 2019 period.
  • Adjusted net profit which is defined as net profit after adding back non-cash, stock-based expense was $76,856 in 2020 compared to $14,126 in the 2019 period.

Highlights and Results for Nine Months Ended September 30th, 2020Compared to the Same nine Months Ended September 30th, 2019

  • Revenues were $1,260,539, a 21% increase, as compared to revenues of $1,040,644 for the same period in 2019
  • Gross Profit was $475,066, a 37% increase, as compared to $344,824 for the same period in 2019
  • Gross margin percentage was 37.7% compared to 33.1 in the 2019 period
  • Net loss was $26,132,488 compared to a net loss of $39,263 in the 2019 period
  • Adjusted net profit which is defined as net profit after adding back non-cash, stock-based expense was $54,267 in 2020 compared to a net loss of $39,263 in the 2019 period.

The Company’s Portfolio of Brands: 

A picture containing drawing, cup

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Biscottelli Wafers        Biscottelli Wafers are available in Lemon, Hazelnut, Vanilla, Cocoa and Caramel. Proudly sourced and imported directly from Italy.

Coco Bliss        Coconut Wafer Bites are light airy wafers with Coconut cream filling in a white coating. Individually wrapped.

Bonbons de Paris        Bonbons de Paris Madeleines. Authentic individually wrapped French mini cakes. Imported from France. 

Biscottelli Macarons   Luxury Imported individually wrapped Macarons. The perfect shelf stable gourmet Macaron. Available in Chocolate, Vanilla, Lemon and Salted Caramel. 

Biscottelli Croissants   The perfect croissants filled with delicious Cocoa (chocolate) Cream or Custard. Proudly sourced and directly Imported from Northern Italy

Fruttata           Fruttata provides a healthy snack alternative in a different product snack segment.

The consumer defensive sector contains s Grocery stores, Packaged foods, Beverages, Farm Products & Food distribution for a reason.  They are defensive.  

In uncertain times, a well-balanced portfolio would not be complete without a defensive position.  So where do you find value in the space? Look for growth, and a price to sales ratio of around 3.5.  

Companies like McCormic & Co (NYSE: MKD) – Up 170% since its covid19 lows, with Lancaster Colony Corp., (NASDAQ: LANC) Simply Good Foods, (NASDAQ: SMPL), Hormel Foods, (NYSE: HRL) J&J Snack Foods, (NASDAQ: JJSF) and General Mills, (NYSE: GIF) following suit, that seems to be a good place to start. 

Have a look at Global Diversified Marketing Group, Inc. (OTC: GDMK) trading with about a 3.5X Price to sales ratio with annualized growth of approximately 28% over 2019, and over 80% same quarter prior year. 

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