Good Morning Trader!
Sometimes the simplest trade ideas are the most rewarding, so let’s take a close look at Definitive Rest Mattress Co. (DRMC) today.
DRMC is not a high-concept play, but their mattress business just took a big leap forward and the chart looks easy to interpret here below $0.35:
As you can see, DRMC was barely a figment on the pink sheets before April 1, but is now liquid enough to pay attention to!
What happened? DRMC has hatched a big acquisition that could be just what it takes to kick its business into overdrive. (Read more)
When the headlines hit on April 3, DRMC skyrocketed to $0.34 but it seems to have taken traders a few days to really digest the news.
Then Friday, the price action went truly berserk, so clearly the “new normal” is now finally starting to snap into place here!
DRMC sells nice all-cotton mattresses across Southern California. Last year revenue was about $900,000, putting it $55,000 from breaking even. (Read more)
Those aren’t massive numbers, but they demonstrate how all DRMC needed was a nudge of extra scale to flip the fundamentals.
Buying this Guatemalan mattress manufacturer may open all that up for DRMC. It’s not hard to see how this deal could cut costs and boost capacity.
Plus, Guatemala happens to be famous in the cotton world for sustainable, artisanal, organic crops that go all the way back to the Mayans! (Read more)
I bet you that being able to buy “fair trade” mattresses instead of the stuff killing lakes in Central Asia is going to be a sales advantage in liberal L.A.!
So good job to DRMC for lining up that edge in addition to whatever boost it gets on the supply side and opening up Latin markets.
Beyond that, the certified financial analyst types are already wising up to DRMC as an “interesting play” because its mattresses are so high-tech! (Read more)
I don’t know what’s high-tech about DRMC’s cotton and springs, but I admit that the high end here goes to the stratosphere! (Read more)
And with DRMC already on the edge of profitability, all it takes is just one new hit product like luxury travel cots or sleeping bags to shift the scale.
Either way, none of this adds up to a scenario where the market would logically punish DRMC for beefing up its business.
So the real question is how “accretive” the Guatemalan connection really is for DRMC from a stock price perspective!
The market is already trying to sort that one out, so refresh that breakout chart and let DRMC shake the sleep out of your eyes!
May All Your Trades Be Green!
