A Roadmap for the Revival of CBD Stocks: Spotlight on YCBD, RLBD, and NEPT

The CBD stock bear market ended, officially, last year. But the recovery has been gradual and slow in gaining traction thus far. That’s actually a promising sign because growth in the space is expected by analysts to continue.

The fact that investor excitement and speculative enthusiasm has been slow in building over recent months in the space is encouraging. The crowd always finds the growth opportunity sooner or later.

Nonetheless, the CBD market is perhaps the most interesting growth market looking ahead over the next 5-10 years due to its inexorable “mainstreaming” dynamic. In other words, this is a small niche market headed for mainstream popularity.

Imagine a pie that is seven inches in diameter. You get a slice of that pie. So do five other people. That means you get about 6.5 square inches of pie. But if that pie grows to 30 inches in diameter over coming years, that same share grows over 18 times bigger.

We may see a similar phenomenon in the CBD – and the market for other legal cannabinoid-based products – as this supplement moves from being a niche market to a mainstream household solution to everyday life, and all its rigors.

With that in mind, we take a look at a selection of active CBD stocks, including: cbdMD Inc (NYSEAMERICAN:YCBD), Real Brands Inc (OTCMKTS:RLBD), and Neptune Wellness Solutions Inc (NASDAQ:NEPT).

 

cbdMD Inc (NYSEAMERICAN:YCBD) promulgates itself as a company that produces and distributes various cannibidiol (CBD) products. It owns and operates the consumer hemp-based CBD brand, cbdMD. The company’s product categories include CBD tinctures, capsules, gummies, bath bombs, topical creams, and animal treats and oils. It also offers pet related CBD products under the Paw CBD brand name.

The company distributes its products through an e-commerce Website, wholesalers, and various brick and mortar retailers in the United States.

YCBD just announced its financial results and its business highlights for its second quarter and six months ended March 31, 2021, including news that net sales of $11.8 million for the second quarter of fiscal 2021 increased by 26% year-over-year from $9.4 million in the second quarter of fiscal 2020 for a record high for the March quarter and that gross profit margin for the second quarter of fiscal 2021 remained strong at approximately 69%, down slightly from 71% in the prior year’s second quarter.

“We continue to build upon our success and develop our science and infrastructure, which we believe will drive shareholder value and separate our brands from our competition. We believe that our proven ability to innovate our marketing as well as deliver award winning products to our consumers will achieve significant and lasting market brand recognition and consumer acceptance for our cbdMD, Paw CBD and cbdMD Botanicals brands,” said Martin Sumichrast, Chairman and Co-CEO of cbdMD, Inc.

Even in light of this news, YCBD has had a rough past week of trading action, with shares sinking something like -15% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -17%.

cbdMD pulled in sales of $12.3M in its last reported quarterly financials, representing top line growth of 21.5%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($29M against $6.7M).

 

Real Brands Inc (OTCMKTS:RLBD) has its roots in a reverse merger that took Canadian American Standard Hemp Inc., or “CASH”, onto the public markets last fall. That transaction installed Thomas Kidrin, who was formerly with MariMed Inc (OTCMKTS:MRMD), as CEO and Chairman.

RLBD is in the business of proprietary specialized extraction and chromatography to produce 99% pure cannabinoids.

RLBD is almost a quarter owned by Turning Point Brands, Inc. (NYSE:TPB), which is a third owned by a multi-billion dollar hedge fund with a vested interest in helping TPB and its major interests secure necessary financing on strong investor-friendly terms.

TPB, itself, is a billion dollar NYSE-listed company that is also a customer of RLBD now for bulk CBD oils and isolates used in Turning Point products. Turning Point has more than 250,000 points of distribution with leading brands such as Zig-Zag®, Stoker’s®, and Beech Nut®.

RLBD also recently brought in the Chief Science Officer of iconic skin care brand, Elizabeth Grant Skin Care, Dr. Adel Rammal, PhD. Rammel will be instrumental in helping to formulate leading edge branded CBD topicals to be marketed through the company’s Wa Brands segment. The company is also working on expanding its product lines and has the proprietary technology to produce higher margin cannabinoid-based products at scale efficiently, which grants RLBD another edge over the competition in establishing itself as a CBD Boom 2.0 winner.

RLBD is also working on an international expansion that will include marketing through international sports celebrities and sports leagues and include a sports wellness product line that Kidrin says is nearing launch. The company is also working on a line of CBD Beverages and other fresh concepts, which will launch in the next 60-90 days.

Real Brands Inc wants to move these new products internationally as well, and will seek to market through authentic influencer relationships. The company is in the process of filing Form 10, which should be completed this month, and believes it will be able to uplist shortly after.

 

Neptune Wellness Solutions Inc (NASDAQ:NEPT) frames itself as a company that operates as a health and wellness products company. The company operates through two segments, Nutraceutical and Cannabis. The Nutraceutical segment offers turnkey solutions, such as raw material sourcing, formulation, quality control, and quality assurance for omega-3 and hemp-derived ingredients under different delivery forms, including softgels, capsules, and liquids.

The Cannabis segment provides extraction and purification services from cannabis and hemp biomass. The company also offers formulation and manufacturing solutions for value added product forms, such as tinctures, sprays, topicals, vapor products, edibles, and beverages.

NEPT just announced that Richard Schottenfeld has resigned as a director of the Company for personal considerations, effective May 17, 2021. According to the company’s release, the Company is committed to aligning itself with the best practices of consumer packaged goods companies across multiple industries including Cannabis, Nutraceuticals, Beauty and Personal Care, and Organic Food and Beverages.

John Moretz, Chairman of the Neptune Board, commented, “Rick has been an invaluable resource to the Company during his tenure. On behalf of the entire Board, I would like to thank Rick for his contributions and service and wish him continued success in the future.”

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 8% in that timeframe. NEPT shares have been relatively flat over the past month of action, with very little net movement during that period.

Neptune Wellness pulled in sales of $3.3M in its last reported quarterly financials, representing top line growth of -63.8%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($32.2M against $19.1M).

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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