Five more states just moved toward greater legalization of pot in November. And a Biden big blue wave win has now been confirmed and will also possibly usher in a federal decriminalization shift that could spur further changes that benefit current players in the cannabis space.
With the bull market in gear, the cannabis space has been one of the most dramatic beneficiaries, as growth estimates ratchet higher and excitement builds.
In other words, pot stocks are hot and running on tailwinds from legislative momentum and stock market enthusiasm, especially for speculative high-growth plays.
With that in mind, we take a look here at a handful of stocks that we think could be some of the most compelling opportunities in the space, including: Sundial Growers Inc. (NASDAQ: SNDL), GrowGeneration Corp (NASDAQ: GRWG), MedX Holdings Inc. (OTC US: MEDH), and Cresco Labs Inc. (OTC US: CRLBF).
Sundial Growers Inc. (NASDAQ: SNDL) trumpets itself as a licensed producer that crafts cannabis using state-of-the-art indoor facilities. The company cites its ‘craft-at-scale’ modular growing approach, award-winning genetics, and experienced master growers as the factors that set it apart from the competition in the rapidly growing cannabis space.
Sundial’s brand portfolio includes Top Leaf, Sundial Cannabis, Palmetto and Grasslands. Our consumer-packaged goods experience enables us to not just grow quality cannabis, but also to create exceptional consumer and customer experiences.
Sundial Growers Inc. (NASDAQ: SNDL) most recently announced that it has launched high-quality cannabis derivative products under the Top Leaf brand in response to rising consumer demands for solventless cannabis extracts. This most recent launch is consistent with Sundial’s focus on premium inhalables, following branded retail offerings of flower, pre-roll and vape cartridges.
“We made a strategic decision to produce these premium products based on demand for solventless, flavorful, pure, and potent cannabis concentrates from a growing group of consumers,” said Andrew Stordeur, President and Chief Operating Officer of Sundial. “Our control of the entire manufacturing process from cultivation to extraction enables us to deliver premium quality products on a consistent basis. Adding bubble hash and other advanced concentrates to our product portfolio will expand Sundial’s share of this rapidly expanding market segment.”
And the stock has been acting well over recent days, up something like 24% in that time. Shares of the stock have powered higher over the past month, rallying roughly 32% in that time on strong overall action.
Sundial Growers Inc. (NASDAQ: SNDL) generated sales of $9.7M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -33.8% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($19.7M against $76.6M, respectively).
GrowGeneration Corp (NASDAQ: GRWG) owns and operates retail hydroponic and organic gardening stores in the United States. If you’re looking for a red-hot name in the cannabis complex, GRWG is tough to beat.
The company carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers.
GrowGeneration Corp (NASDAQ: GRWG) just yesterday reported preliminary record full-year 2020 revenue of $192 million, versus $80 million for 2019, an increase of 140%. As the Company continues to outpace guidance, it is increasing its 2021 revenue guidance range to $335 million-$350 million.
“We delivered strong shareholder value in 2020, with triple-digit revenue growth despite unprecedented challenges and an uncertain environment. This growth came through strategic acquisitions of best-in-class hydroponic stores, exceptional same-store sales growth, and the expansion of our omnichannel and private label offerings – a strategy we will accelerate this year,” said GrowGen CEO Darren Lampert. “We expect significant revenue growth in the year ahead as we continue to execute on these initiatives. Accordingly, we have raised our 2021 revenue guidance to $335-$350 million, our 2021 adjusted EBITDA guidance to $38 million – $40 million, and increased the number of projected GrowGen store locations to 55.”
GRWG shares have been acting well over recent days, up about 32% in that time.
GrowGeneration Corp (NASDAQ: GRWG) managed to rope in revenues totaling $55M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 152.6%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($55.3M against $20.9M).
MedX Holdings Inc. (OTC US: MEDH) is a far more speculative opportunity, but could mature into a very interesting name in the cannabis and hemp space, particularly given its early-stage turnaround posture and the lack of speculative involvement in a market space that has become somewhat overburdened with speculative interest.
The company is focused on driving growth through vertical integration, strategic partnerships, licensing, franchising, and providing solutions to the emerging hemp and cannabis industry, and its recent reboot could provide an interesting bargain scenario before the crowd spots it.
MedX Holdings, Inc. (OTC US: MEDH) expects a final change of control of the majority shares to be transferred to Hans Enriquez within a couple weeks, which will complete the reboot in an official sense and lead to merging in new subsidiaries within the hemp and cannabis industries followed by a name and ticker change.
Stated CEO, Hans Enriquez: “I’m very pleased with the progress that has been made in the 6 months since I’ve come into MEDH and as the momentum of legalization continues to grow, we continue to position ourselves and look forward to a very prosperous year ahead.”
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action MEDH shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -5% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.
MedX Holdings Inc. (OTC US: MEDH) is effectively a new and promising member of the cannabis patch in the market. The company just regained OTC Markets access, got its last three periods of quarterly filings caught up, and achieved Pink Current status. That now sets up a refresh where MEDH is ready to begin executing its operational strategy for 2021. Given the dramatic strength in the group, that shift stands to potentially pay off for existing stakeholders.
Cresco Labs Inc. (OTC US: CRLBF) manufactures and sells medical cannabis products in the United States. It offers cannabis dry flower; vaporizer forms of cannabis; cannabis oil in capsule, oral and sublingual solutions; cannabis in topical; and other cannabis products.
The company also provides cannabis infused edibles, including chocolate and toffee confections, fruit-forward gummies, and hard sweet and chews. Cresco Labs Inc. sells its products under the Cresco brand. In addition, it operates a Hope Heal Health dispensary in Fall River, Bristol County, Massachusetts.
Cresco Labs Inc. (OTC US: CRLBF) recently announced the first annual report for its SEED (Social Equity and Educational Development) initiative. The report highlights the Company’s many achievements over the past year to help create a more diverse and inclusive cannabis industry through SEED’s restorative justice initiatives, community business incubators and educational and workforce development programming. The 2019-2020 SEED Annual Report is available online at crescolabs.com/seed.
“We are proud to have launched the cannabis industry’s first comprehensive social justice and social equity initiative and to report the significant strides the SEED program has made towards the more equitable inclusion of Black and Brown people in cannabis,” said Charlie Bachtell, CEO and Co-founder of Cresco Labs.
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 14% in that timeframe. Shares of the stock have powered higher over the past month, rallying roughly 21% in that time on strong overall action.
Cresco Labs Inc. (OTC US: CRLBF) generated sales of $204.3M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 56.4% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($79.6M against $325.6M, respectively).
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