American Rebel Holdings: The Gun Safe Small Cap Firing on All Cylinders

Gun sales in the United States have been on an absolute tear! Whether it be for personal protection, or enjoying the outdoors, the fact is that gun sales and personal protection products have skyrocketed since the pandemic began and show no signs of slowing.

Dr. Garen J. Wintemute, a gun researcher at the University of California Davis, discussed the trends he’s seen in gun ownership in America by saying, “There was a surge in purchasing unlike anything we’ve ever seen. Usually, it slows down. But this just kept going.” As an example, in March of 2020, gun sales topped 1 million within a one-week time period, the largest single week figure in over 20 years.

Today, 39% of American households own at least one gun, this is up from 32% back in 2016. This mass trend of gun ownership is largely due to the heightened importance many have put on being able to protect themselves and their loves ones.

What this means for investors, is a large portion of the 330 million Americans will require safe and accessible ways to store their guns and security accessories. And today, we will be covering a company that is providing phenomenal value to this quickly growing market segment.

Company Profile

American Rebel Holdings (AREB) is a company providing premier safes and personal security products. Their product line is extremely extensive through offering home, office, and personal safes, as well as vault doors, concealed carry backpacks, and a range of concealed carry jackets, vests, and coats. Additionally, American Rebel provides supplemental accessories and space saving items for safes such as, hangers, light kits, moisture guards, and rifle rod kits. The company sells their products through various retailers, merchandisers, speciality stores, and online.

American Rebel’s core mission is to “provide innovative products and promote responsible gun ownership while celebrating a concealed carry lifestyle”, and the company is executing on this mission through providing high quality products at affordable prices. American Rebel currently has their products in over 35 different locations across America and ships nation-wide through a variety of different options.  The Company is also developing a new line of home and office safes that will feature a stronger door, an improved locking mechanism, an increased fire rating and will carry a Made-in-the USA label.

American Rebel Successfully Closes Capital Raise Totalling $10.5 million

Earlier this month, American Rebel closed a capital raise with gross proceeds totalling $10.5 million. With this large influx of capital, the company can now substantially increase the strength of its balance sheet, as well as fund further research and development projects and further facilitate their growth strategy.

The market for American Rebel’s various products is substantial, and with the trend of more Americans becoming gun owners, this market is seeing tremendous further growth. The ability for the company to continually innovate and improve its market offering, as well as continue working on expanding their reach through partnering with a rising number of retailers all requires substantial capital. The closing of this additional public offering allows American Rebel to manage their current obligations and turn their focus to the future and large opportunity at hand.

American Rebel is Executing on their Expansion Strategy

American Rebel is executing on their expansion strategy through continued partnerships with distributors who have a long reach into their target market and across the country. Retailers and distributors are actively searching for new product sources due to tariffs on imported safes from China and supply chain challenges. In February of 2021, the company announced an order from Dunham Sports, a regional sporting goods superstore chain with over 240 locations across the mid-west and southeastern US. With Dunham’s specializing in athletic equipment, clothing, guns, and gun safes this type of order marks a significant potential driver of further growth for American Rebel.  As American Rebel expands its inventory the company will seek to grow its base of dealers and distributors.

American Rebel also expects the cannabis dispensary industry to become a source of significant growth.  Cannabis dispensaries have insurance requirements, and many local ordinances place a heavy burden on the dispensaries to secure their inventory outside of normal business hours.  As a result, many dispensaries have turned to gun safes as a means secure storage.  American Rebel has designed a safe tailor made for the cannabis industry and with that is well positioned to address the growing needs of this market which is expected to exceed $43 billion by 2025.   

Thoughts on Valuation

It’s no secret for those watching small cap growth stocks that the market has not been kind to these types of companies as of late. However, times like these are typically when the greatest opportunities exist.

Currently, American Rebel shares are well off their 52-week high of $4.20 a share and recently touched $1.59.  With 4.5 million shares outstanding, the market cap is about $7.2 million.  The company raised $10.5 million in its recent capital raise and noted in its SEC filings it intended to repay debt.  As per the company’s prospectus, total liabilities as of September 30, 2021, were about $5 million.  After repayment of debt and related offering expenses, we believe current cash balance is likely about $4 million, which means more than 50% of the current market value is cash.   An investor would be paying 3.5 million for a company with 2020 revenues of more than $1.2 million, and with a long runway for growth as recent trends provide strong tailwinds for a company selling gun safes and personal protection equipment.

All this, points to signs that American Rebel is being severely undervalued by the market, as the company has been unreasonably punished with the recent sell-off. Despite the recent poor performance of the share price, the company is firing on all cylinders, and those who are able to see past the short-term volatility could be handsomely rewarded.

Key Takeaway

Gun sales and gun ownership in America is on the rise. Most data figures point to this trend only increasing as time goes on. This has translated to 39% of American households owning a gun, and who will now require safe, affordable, and secure method to store their firearms.  The safe has become the latest must have home accessory. As well, personal protection has become of utmost importance for many Americans, as the global pandemic and recent political tensions have made it clear how important it is to have the means to protect yourself and your loved ones.

American Rebel Holdings is at the epicenter of these trends and is positioned perfectly to capitalize as these trends develop. The company has created a great cash position and with a large product offering and the ability to cater to many different customers.  American Rebel is proving they truly are “America’s Patriotic Brand”. American Rebel is showing they can partner with distributors who have deep penetration in their target market and can continuously come out with new and innovative products. The market has turned to a more value-based approach and American Rebel is showing incredible value at current prices, mixed with a great growth trajectory.

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