Well, perhaps the title caught your eye and you were hoping to see a company that was already posting mega-million dollar revenue figures and was still grinding its way higher. Sorry, not this time. But, don't run yet, the fact remains, that while Next Group Holdings Inc (OTC:NXGH) has not yet posted a hundred million in revenues, they are, in fact, staring down an estimated consumer market that is well more than 100 million users. And, while that user potential is impressive, NXGH is also preparing to take a significant bite from the current $30 billion market that is up for grabs to those that have the foresight and perseverance to benefit from that lucrative market and its riches. In this case, Next Group Holdings, Inc. is not only planning and executing upon an aggressive strategy to earn business from this unnoticed and underserved market but is at the same time building a comprehensive package of services that can get the job done.
While NXGH is a micro-cap stock, the market price may not be near accurate when combining the sum of the parts of this growing enterprise. And, it's the total package that NXGH is building that should have investors excited about the potential in NXGH. If Next Group Holdings were merely putting the pieces of its business together at this point, they would certainly be nothing more than a speculative investment. However, NXGH has been busy assembling the components necessary to bring a comprehensive, simple and easily scalable platform to market. Thus, the company is well beyond the planning stages. But, that does not mean that a ground floor opportunity does not exist, because, at current prices, one certainly does.
Coinciding with the management teams opinion that the stock price is grossly undervalued, some investors are beginning to notice and share the same point of view. Many realize that NXGH has the capability to shape, disrupt and transform a financial industry that has left a significant portion of the nation's population unattended when it comes to offering a fully integrated, accessible and dynamic platform that can merge both banking and lifestyle. And, for investors in NXGH, the hope is that the growing pains experienced during the start-up phase of the company begin to deliver handsome dividends.
How To Take A $30 Billion Market
Innovation is key to disruption, and the most successful companies were in one way or another so successful at disrupting the status-quo that their technology emerged supreme. Although Next Group Holdings, Inc. did not invent some new technology that can change the lives of people because of what it can do, it has managed to develop a way for the over 100 million underserved consumers in the United States to enjoy bundled services and conveniences because of what it does.
NXGH is a combination of successes and because of the seamless capability of its platform can deliver a multitude of services quickly and reliably. NXGH is in the process of putting into place a platform that is on the verge of pushing brick and mortar banking to the brink of obsolescence. No, NXGH is not the pioneer of the movement, but they are in fact taking action to benefit from the changes. And, everything is changing, from the way people shop, how they communicate, to how they conduct banking transactions. And, the bottom line from any expert polled is that the only direction that mobile generated and integrated platform technology is moving... is forward.
Progression is what makes Next Group Holdings attractive to investors. Since 2016 the company has been busy assembling accretive components to an integrated business platform designed to deliver meaningful growth and, in turn, generate significant shareholder value. NXGH has been active on numerous fronts, building a company to take advantage of long distance calling, building a base of customers that use the company's prepaid card and remittance services, and to a large extent have been adopting the company's mobile banking platform. Keep in mind, the market they are working to penetrate is comprised of well over 100 million consumers, mostly Latin and Mexican in origin that has been somewhat unable to secure mainstream methods of traditional banking and mobile services. These underserved Latino based markets are not merely getting ignored by the larger competitors in the industry; they also fail to recognize the need to establish a unique rapport with these potential customers and more importantly have utterly failed to invite these customers into their networks. Next Group Holdings wants to change that component of the cycle, and they want to enjoy a significant amount of the current $30 billion market potential that is there for a provider smart enough to bring the right product to market.
NXGH Bringing It Home
There is a difference in this Miami, Florida based company. Primarily they are small enough to understand and stay closely associated with their target market and at the same time has the tools in place to scale to much greater degrees of success quickly.
To address the market, NXGH has built its technology company to enhance mobility solutions to the unbanked, underserved, and emerging markets. As noted, the company has assembled critical components to attract the targeted audience. They have been successful primarily through its three subsidiaries NEXTCALA, which handles the company's general purpose reloadable (GPR) prepaid Visa® card, NXTGN, which offers a multipoint HD video platform service, and NEXT MOBILE360, the company's provider of all things mobile, inclusive of mobile voice, text, and data services. Once the components get fully synchronized, the mission is to enable a comprehensive, all-inclusive mobile platform for its customers, from comfort lifestyle to fully supportive banking solutions.
So, how does NXGH bring it home? Well, at its core, the company simply knows its market. So much so, that they have developed and announced the pending launch of CUENTAS, the company's full-service virtual bank. It's targeting the market potential mentioned earlier, the over 100 million unbanked and underserved consumers in the United States.
CUENTAS Unmasked
Set for market launch in the coming months, CUENTAS is set to deliver the ease of a one-stop shop, enveloping a system that can recharge cash to card transactions, load mobile phone services and perform online banking services that rival even the largest financial institutions in the industry. And, unlike the brick-and-mortar banking institutions that become more archaic by the month, the CUENTAS platform can be quickly moved, has a small counter-top footprint and can network seamlessly to a vast network of connections throughout the United States, Mexico and countries where data symmetry exists. In the meantime, though, targeting the 100 million consumers and the $30 billion U.S. market is more than enough to keep both NXGH and CUENTAS busy for months to come.
The CUENTAS platform will include unprecedented access to discounted products and services from an extensive list of leading retail gift card brands, inclusive of airlines, major retailing chains, movie theaters, restaurants, and resort parks. And, that's just to name a few. The CUENTAS platform brings much more opportunity and will further lead to a seamless integration of MIO, a single-use credit platform that will be using the CUENTA interface.
Placed side by side, CUENTAS appears similar to other mainstream banks, whether it be virtual or brick-and-mortar. But, in actuality, it is better. Not only does the CUENTAS program offer an array of discounts and promotions to industry leading brands, but the program also incentivizes customers to utilize the card. In doing so, they can enjoy free calling minutes, reload existing phone cards and connect both the USA and International markets to query accounts directly, a benefit not currently offered by any other virtual competitor.
The success expected from CUENTAS lay in the power of the platform. The program's flexibility and growing volume of retail locations providing access to CUENTAS make the program accessible, all-encompassing and comprehensive. But, the platform also provides for easy access and transfer of funds to countries throughout the world. Then, with MIO joining the NXGH stable of services, customers can purchase a one-time use, non-reloadable MIO card but have the ability to transfer funds from MIO to a designated CUENTAS account instantly. Thus, the integration of the two instruments combines to make a single super-convenient luxury for customers.
In the end game, though, the strength in NXGH may lay in the fact that they know and understand the market they are working to serve. The company has been built with well thought out detail, has managed to acquire the right accretive supplements at the right times and has built a sizable arsenal of subsidiaries that all share toward the common goal of producing state-of-the-art services with a focus on creating shareholder value for their investors.
Investing With The Team
The goals are aligned when it comes to managements motivation to create shareholder value. Of the approximate 259 million total outstanding shares issued, management owns just under 70% of the ownership in the company. Also, current executive management held prior ownership in NXGH acquisitions and had extensive knowledge of the entire integrated operation the company is moving forward.
Being disruptive is not easy, and for a small and emerging business to create dynamic change in the industry will take time, strong leadership, a well thought out plan, and money. The money part is happening, and the numbers are heading in the right direction. For the quarter ending March 31, 2017, NXGH recorded $811,458 in revenues and posted positive earnings of three cents per fully diluted share. Yes, profits.
Earnings make the difference when looking for emerging companies that have the ability to grow from existing cash-flow compared to those that are in constant need of the capital markets and their greedy dilution machines. Will NXGH need additional capital? It depends on what acquisition candidate comes their way.
But, posting net earnings is a welcome sight to any investors and for this stock to be trading at current levels demonstrates the opportunity for investors to realize capital appreciation from an investment into NXGH. Take a long term perspective and allow this company to mature, it's doing the right things at the right time and management is hard at work to increase shareholder value, which simultaneously enriches themselves.
When it comes to micro-cap valuations, the market experts often prove to be very inefficient, and with NXGH they may have simply missed recognizing a fantastic little company in progress. But, just as some stocks can remain undercover, others can suddenly emerge with a vengeance. For NXGH, emergence may be in style. The stock has been consolidating in the three cent range for the past two weeks and has traded closer to six cents for most of July, representing a potential 100% upside if the stock simple catches its most recent valuations.
However, NXGH is in a position to do better, and with the company posting record profits and with revenue and acquisitions beginning to deliver the financial rewards intended, the company may be on the verge something big. NXGH may not only become disruptive to industry, but perhaps disruptive to its share price, but in a right way. As investors, we like when management is unhappy, and we look at that as a clue that with misery comes motivation, and from motivation comes change. At NXGH, the changes are happening, and they are accretive.
The first quarter was buff and investors should pay close attention to the managements tone and look for continued enthusiasm in their guidance. If the most recent quarter is indicative of future success, investors may be sitting pretty as the stock should begin to appreciate the growth. But, no one can foresee the future, we can only speculate. For investors that can endure some risk and place a portion of their capital into an investment that can run wildly volatile, NXGH may offer a cozy vehicle to belt in to, no doubt leaving you eager for a fast ride toward increased revenue growth and accretive acquisition.
I do not hold any position in any stock mentioned herein nor plan to own any position within the next 72 hours.
This article was originally featured on CNA Finance.