A short thread on $CTHR. Charles & Colvard was the first company to sell and produce synthetic moissanite. Moissanites are 1 grade softer than diamonds (harder than other gem stones), have more sparkle and come at 5-10% the cost.
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More importantly, they're popular among millennials because they're considered more ethical than good-old blood diamonds. Demand has been consistently growing over the years, and spiked in Q4 if Google trends is any indicator. They have a 2% market share in engagement rings.
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Most patents expired in 2015 - 2016, after which some competition entered the market. However, CTHR has since upgraded their manufacturing process and is the only party able to make colorless moissanite.
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Let's talk downside. At a market cap of 38m USD, there is 13m USD in cash and 29m of inventory. Most cash was raised in an equity offering 20% above current prices and there have been consistent inside purchases.
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They got a CEO change in 2020. Don O'Connel continued the shifts to D2C and selling finished jewelry vs loose stones. They also launched a business in lab grown diamonds and extended distribution to 50 Macy's stores. Distribution is a very important differentiator!
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P/E is 10-12x, but 1/3rd of market cap is Net Cash. More importantly I believe it can grow from here if millennials continue to favor conflict-free stones. Cost structure is leaner since Covid and GP margins expand bc of D2C and higher share of colorless stones.
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