Pot stocks have been pulling back after Aphria Inc (NASDAQ:APHA) posted less than spectacular results earlier this week. That helped to break down the main industry ETFs and shake out the remaining speculative interest in the space.
Which brings us to a rather interesting point.
Recall that Tilray Inc (NASDAQ:TLRY) reached as high as $67/share (over $70 if you count after-hours action) just two months ago. Obviously, that move was overdone and badly in need of some corrective action.
However, the same basic idea that was driving the action then is still in place now: namely, that the legalization trend is continuing full-steam ahead, and regulatory gateways suggest stocks in the space should be valued as high-margin consumer packaged goods names rather than commodity producers, which protects against expectations of a typical boom-bust cycle.
That standard heightens the value of M&A and creates the potential for real and sustained investment growth.
Yet, even within that narrative, TLRY shares have pulled all the way back to as low as $16/share – down 76% off the 52-week highs.
Other stocks in the space have seen similar if less dramatic moves. But we would point out action from yesterday as holding the potential to represent an important sign of institutional support perhaps entering the picture – Pot stocks rallied sharply on no positive catalysts after the APHA flop.
With that in mind, we take a look at some of the more interesting names in the space, including: Cresco Labs Inc (OTCMKTS:CRLBF), GrowGeneration Corp (OTCMKTS:GRWG), MedX Holdings Inc (OTCMKTS:MEDH), and Sundial Growers Inc (NASDAQ:SNDL).
Cresco Labs Inc (OTCMKTS:CRLBF) is one of the largest vertically integrated, multistate cannabis operators in the United States, with a mission to normalize and professionalize the cannabis industry. Employing a consumer-packaged goods approach, Cresco Labs is the largest wholesaler of branded cannabis products in the U.S.
Its brands are designed to meet the needs of all consumer segments and comprised of some of the most recognized and trusted brands including Cresco, Remedi, High Supply, Cresco Reserve, Good News, Wonder Wellness, FloraCal Farms and Mindy’s Chef Led Artisanal Edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside, Cresco Labs’ national dispensary brand, is a wellness-focused retailer created to build trust, education and convenience for both existing and new cannabis consumers.
Cresco Labs Inc (OTCMKTS:CRLBF) most recently announced the launch of Wonder Wellness Gummies and availability in Illinois. According to its release, the new low-dose edibles are enhanced with botanicals to complement the overall cannabis experience, and their simple packaging communicates desired effects so wellness-minded category newcomers can consume with confidence to add cannabis as a part of their daily lifestyles.
“We’re focused on growing our share through an innovation strategy that capitalizes on both market dynamics and edibles portfolio white space,” said Greg Butler, Chief Commercial Officer at Cresco Labs. “Effect-forward, 5 mg gummies represent one of the largest market segments, and Wonder Wellness offerings address some of the most desirable consumer needs of relaxing, getting better sleep, and being happy. Wonder Wellness is built for the exact occasions when wellness-minded consumers are looking for products to enhance or improve their everyday experiences.”
Even in light of this news, CRLBF has had a rough past week of trading action, with shares sinking something like -7% 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.
Cresco Labs Inc (OTCMKTS:CRLBF) managed to rope in revenues totaling $211.5M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 287.2%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($179.3M against $248M, respectively).
GrowGeneration Corp (OTCMKTS:GRWG) trumpets itself as a company that, through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. The company has been growing rapidly through a series of key strategic moves.
GrowGen 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 (OTCMKTS:GRWG) recently announced its acquisition of 55 Hydroponics, a hydroponic and organic fertilizer superstore located in Santa Ana, California. Founded in 2010 by Michael Dominguez, 55 Hydroponics is the dominant hydroponics supplier in Orange County, with annual revenues approaching $10 million.
According to the release, the acquisition brings the number of GrowGen locations in California, the country’s largest legal cannabis market, to 18, with 9 locations in Southern California. When added to the recently announced leased locations in the Southern California market, GrowGen will operate close to 800,000 square feet of retail and warehouse space across 53 locations nationwide, with 11 of those locations in the important Southern California market.
And the stock has been acting well over recent days, up something like 3% in that time.
GrowGeneration Corp (OTCMKTS:GRWG) generated sales of $61.9M, 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 12.6% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($177.9M against $27.3M).
MedX Holdings Inc (OTCMKTS:MEDH) 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.
The stock is smaller and more speculative, but that could also add up to additional upside opportunity if management executes from here.
MedX Holdings Inc (OTCMKTS:MEDH) recently announced that it acquired Smart Brands Digital, LLC as a wholly owned subsidiary. According to its release, Smart Brands Digital, a Texas company, will be responsible for the online product marketing and brand awareness of MEDH’s various hemp and cannabidiol (CBD) products and initiatives.
“Bringing in Smart Brands represents the first phase of several acquisitions under MEDH in achieving our long-term operational strategy. We look forward to providing to shareholders additional updates as they unfold,” stated Hans Enriquez, CEO of MEDH.
The company also noted in the release that it intends to announce additional subsidiaries in the near future, following the release of its upcoming annual report.
MedX Holdings Inc (OTCMKTS:MEDH) has been a rebirth story in the making, with the company gearing up for a big run to close out 2020 after regaining OTC markets access, getting current on filings, and ramping up operations in the hemp and cannabis space. Shares of the stock have been seasawing inside of a wide basing pattern, with higher highs and higher lows logged over recent months and key support holding firm.
Sundial Growers Inc (NASDAQ:SNDL) is 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.”
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 SNDL shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -4% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -40%.
Sundial Growers Inc (NASDAQ:SNDL) generated sales of $10.6M, 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 10.1% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($51.6M against $19M).