CBD is the cannabis-related play that deserves perhaps more excitement and interest from investors than its more well-known counterpart, marijuana. CBD is actually on pace to grow even bigger than pot because it holds the potential go mainstream across the board.
But stocks in the space have taken a beating. The line between value play and value trap is a thin one. But this theme carries enough potential to leap over it in a single bound and likely on the near-term horizon as estimates of growth continue to be ratcheted higher.
Today, we take a look at four of the most promising possibilities in the space: Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF), GD Entertainment & Technology Inc. (OTCMKTS:GDET), CV Sciences Inc (OTCMKTS:CVSI), and Canopy Growth Corp (NYSE:CGC).
Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) is a good example of a company that has struggled to adapt to changing circumstances. But the company is working to expand fast, and raising capital to kickstart the action.
Already, CWBHF represents the largest CBD pure-play in terms of total distribution footprint.
To wit: The company just announced that it has entered into an agreement with Canaccord Genuity Corp, pursuant to which the Lead Underwriter, together with a syndicate of underwriters have agreed to purchase, on an underwritten basis, 5,000,000 units of the Company, at a price of C$13.25 per Unit, for aggregate gross proceeds to the Company of C$66,250,000.
According to the release, net proceeds from the Offering will be used primarily to fund the Company’s business development and for general working capital purposes.
Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) bills itself as a company that develops and distributes hemp-based cannabidiol (CBD) wellness products. Its products include CBD hemp oils, capsules, topicals, and pet products that feature CBD hemp oil extracts.
Charlotte’s Web Holdings, Inc. sells its products online as well as through distributors, and brick and mortar retailers.
The company was formerly known as Stanley Brothers Holdings Inc. and changed its name to Charlotte’s Web Holdings, Inc. in July 2018. The company was incorporated in 2018 and is headquartered in Boulder, Colorado.
Charlotte’s Web Holdings, Inc. is the market leader in the production and distribution of innovative hemp-based cannabidiol wellness products. Founded by the Stanley Brothers, the Company’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into whole plant hemp extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Industrial hemp products are non-intoxicating.
Charlotte’s Web current product categories include tinctures (liquid products), capsules, topical, as well as pet products. Charlotte’s Web hemp-based whole plant extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website.
The stock has suffered a bit of late, with shares of CWBHF taking a hit in recent action, down about -3% over the past week.
Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) pulled in sales of $33.1M in its last reported quarterly financials, representing top line growth of 42.7%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($46.3M against $31.2M).
GD Entertainment & Technology Inc. (OTCMKTS:GDET) is another stock that continues to look extremely cheap relative to the strong pace being set by the company in its core strategy, especially on the CBD side.
The company recently opened a store for its CBD-based products subsidiary, The Greenery. The store, which is located at Palisades Center in West Nyack, New York, the second-largest shopping mall in the New York metropolitan area and the eighth-largest in the United States, was opened three weeks in time for Black Friday and the holiday shopping season.
Now it is coming out and already talking about expansion in that space. Specifically, according to its most recent release, the company is entertaining a tangible offer to expand its “The Greenery” (TheGreeneryCo.com) CBD products physical retail exposure to a second, and larger, mall-based physical store location following positive branding and customer traffic data for its first mall-based physical store location.
“Following an extremely positive experience at the kiosk level at Palisades Center, we have been approached by management at that location and given a priority access option to expand to an additional and larger space in another similar mall,” noted Anil Idnani, CEO of GDET. “The vast bulk of the potential market for CBD products has no idea that they need to navigate to some backwater ecommerce portal to buy CBD-based products. Instead, they are walking around popular shopping areas, browsing for something new and interesting to try – and CBD is that new and interesting possibility. The only way capture any piece of that market is to be in front of them, out in the world.”
This is spectacular reasoning, and why we felt compelled to include the stock on this list.
One other dimension that differentiates GDET in this list is diversification: it is also a fully-active and operating blockchain play. There are many potential synergies between these segments. But there is also the advantage of diversification of revenue streams, which may provide some cover if there is a further capitulatory washout in the hemp, cannabis, and CBD complex before the next leg higher in the space gets fully underway.
We would also note that the company just announced a substantial reduction in its outstanding share count to lighten the load and send a shareholder-friendly signal to the market.
“If we move forward with this second location, it will be because we have run the numbers and the store will more than pay for itself,” continued Idnani. “At this point, we believe we can be selective and expand as the right opportunities come along. But we also believe that this approach to distribution is on target for this market because we gain an edge in brand exposure that will pay priceless dividends down the road as this marketplace continues to go mainstream over coming quarters.”
CV Sciences Inc (OTCMKTS:CVSI) is a clear market leader in the CBD space in terms of brand recognition and distribution footprint.
The company just announced a new distribution partnership with Southeastern Grocers, Inc. (SEG) with an initial launch at 115 Winn-Dixie stores in Florida and 37 BI-LO stores in South Carolina. PlusCBD™ Oil products are available at these stores as of November 3, 2019.
According to the release, “CV Sciences’ new distribution partnership with SEG’s Winn-Dixie and BI-LO banners increases distribution and availability of a broad assortment of the Company’s best-selling PlusCBD™ Oil products, including ingestible dietary supplements. New distribution at select Winn-Dixie stores in Florida and BI-LO stores in South Carolina includes both topical products, such as PlusCBD™ Oil Extra Strength and Original Balm and PlusCBD™ Oil Roll-On, as well as PlusCBD™ Oil full spectrum hemp extract dietary supplements, including Gold Formula Softgels, Gold Formula Drops and Gummies, and Total Plant Complex Sprays.”
CV Sciences Inc (OTCMKTS:CVSI) bills itself as a company that operates two distinct business segments: a drug development division focused on developing and commercializing novel therapeutics utilizing synthetic CBD; and, a consumer product division focused on manufacturing, marketing and selling plant-based CBD products to a range of market sectors.
CV Sciences, Inc. has primary offices and facilities in San Diego, California and Las Vegas, Nevada.
Moreover, CV Sciences, Inc. operates as a life science company. It operates through two segments, Specialty Pharmaceuticals and Consumer Products. The company focuses on developing and commercializing prescription drugs utilizing synthetic cannabidiol (CBD) as the active pharmaceutical ingredient. Its initial drug candidate is CVSI-007 that combines CBD and nicotine for the treatment of smokeless tobacco use and addiction.
The company also engages in the development, manufacture, marketing, and sale of consumer products containing plant-based CBD under the PlusCBD Oil name in various market sectors, including nutraceutical, beauty care, specialty foods, and vape.
And the stock has been acting well over recent days, up something like 12% in that time. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -27%.
CV Sciences Inc (OTCMKTS:CVSI) generated sales of $12.6M, 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 -25.2% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($14.2M against $12.1M).
Canopy Growth Corp (NYSE:CGC) just announced that, effective January 14, 2020, David Klein has been appointed as the Company’s Chief Executive Officer.
According to the release, “David brings a wealth of expertise to this role, having served in a number of senior leadership capacities over the past 14 years at Constellation Brands. His capabilities include extensive CPG and beverage alcohol industry experience, strong financial orientation, and experience operating in highly regulated markets in the U.S., Canada, Mexico and Europe. David is an experienced strategist with a deep understanding of how to build enduring consumer brands while leveraging operational scale across a dispersed production footprint. He is a strong leader with a proven track record of developing diverse and high performing teams.”
“Canopy Growth sits at the forefront of one of the most exciting new market opportunities in our lifetime,” said Klein. “Thanks to the efforts of Mark and the entire team at Canopy Growth, no company is better positioned to win in the emerging cannabis market. I look forward to working with the team to build on the foundation that has been laid, to develop brands that strongly resonate with consumers, and to capture the market opportunity before us. Together we will drive sustainable, industry-leading growth that benefits employees, shareholders and the communities in which we operate.”
Canopy Growth Corp (NYSE:CGC) engages in growing, possession, and sale of medical cannabis in Canada. Its products include dried flowers, oils and concentrates, softgel capsules, and hemps.
According to its own materials, the company offers its products under the Tweed, Black Label, Spectrum Cannabis, DNA Genetics, Leafs By Snoop, Bedrocan Canada, CraftGrow, and Foria brand names. It also offers its products through Tweed Main Street, a single online platform that enables registered patients to purchase medicinal cannabis from various producers across various brands.
In the company’s words, “Canopy Growth is a world-leading diversified cannabis and hemp company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time.”
This is also one of the most geographically diversified players in the cannabis space, with operations in 12 countries across five continents.
And there has been plenty of PR work here. The Company is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public’s understanding of cannabis, and through its partly owned subsidiary, Canopy Health Innovations, has devoted millions of dollars toward cutting edge, commercializable research and IP development. Through partly owned subsidiary Canopy Rivers Corporation, the Company is providing resources and investment to new market entrants and building a portfolio of stable investments in the sector.
One of its most important divestitures and strategic interests is Canopy Rivers Inc., a unique investment and operating platform structured to pursue investment opportunities in the emerging global cannabis sector. The company works collaboratively with Canopy Growth to identify strategic counterparties seeking financial and/or operating support.
The company has developed an investment ecosystem of complementary cannabis operating companies that represent various segments of the value chain across the emerging cannabis sector. As the portfolio continues to develop, constituents will be provided with opportunities to work with Canopy Growth and collaborate among themselves, which the company believes will maximize value for its shareholders and foster an environment of innovation, synergy and value creation for the entire ecosystem.
If you’re long this stock, then you’re liking how the stock has responded to the announcement. CGC shares have been moving higher over the past week overall, pushing about 10% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 5% in that time on strong overall action.
Canopy Growth Corp (NYSE:CGC) pulled in sales of $76.6M in its last reported quarterly financials, representing top line growth of 228.4%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($2.8B against $425.8M).
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