Opportunity Lights Up in Cannabis Stocks (KERN, TLRY, MEDH, GRWG)

While there are some knuckle-whitening formalities to traverse, the political environment has resolved in favor of a pro-cannabis regime now in control of both houses of Congress and the White House.

The upshot momentum has already stoked positive results and investor sentiment in the space.

According to Akerna (NASDAQ:KERN), the Christmas and New Year’s holidays marked the single biggest cannabis sales period of the year to close out last year. The final period of the year generated roughly $427 million in sales in the space.

The largest sale day of the period was Wednesday, Dec. 23, with $87.3 million, making it the third largest cannabis sales of the year, just behind Green Wednesday with $87.4 million. Exceeding all expectations, New Year’s Eve was the single biggest sales day of 2020 with $89.4 million.

With this in mind, we take a look at some of the most interesting names in the space, including: Tilray Inc (NASDAQ:TLRY), MedX Holdings Inc (OTCMKTS:MEDH), and GrowGeneration Corp (OTCMKTS:GRWG).

 

Tilray Inc (NASDAQ:TLRY) offers its products in Argentina, Australia, Canada, Chile, Croatia, Cyprus, the Czech Republic, Germany, New Zealand, and South Africa.

One of its key subsidiaries is High Park, which was launched to produce and distribute world-class cannabis brands and products for the Canadian market. Based in Toronto and led by a team with deep experience in cannabis and global consumer brands, High Park has secured the exclusive rights to produce and distribute a broad-based portfolio of cannabis brands and products in Canada, subject to applicable laws and regulations.

Tilray Inc (NASDAQ:TLRY) most recently announced that it has been selected by the French National Agency for the Safety of Medicines and Health Products (ANSM) to supply Good Manufacturing Processes (GMP) certified medical cannabis products for experimentation in France.

According to the release, Tilray will supply GMP-produced medical cannabis products to serve patients in need for the duration of the French experiment (18-24 months), due to begin in the first quarter of 2021.

Even in light of this news, TLRY has had a rough past week of trading action, with shares sinking something like -5% 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.

Tilray Inc (NASDAQ:TLRY) pulled in sales of $51.4M in its last reported quarterly financials, representing top line growth of 0.6%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($155.2M against $133.5M).

 

MedX Holdings Inc (OTCMKTS:MEDH) recently issued a corporate update related to an interesting legislative session in Texas earlier this month. The company is a recent pivot into the cannabis space and may deserve a close look given its strong outlook and the promising context offered by the cannabis space as momentum drives new capital toward this growth theme.

MEDH is based in Texas, so the state’s shifting legislative context has had an important impact on the company’s outlook. According to its recent update, there are currently 16 state-level jurisdictions that permit marijuana for adult recreational use and 36 states that allow it for medical purposes. Ahead of the January 2021 legislative session, Texas lawmakers have pre-filed several bills that would expand the state’s medicinal cannabis program and add it to the list of states legalizing adult-use.

MedX Holdings, Inc. (OTCMKTS:MEDH) also notes that it “continues to prepare for these impending legislative changes, finalizing agreements and advancing relationships that will support its growth-by-acquisition strategy and vertical integration.”

More to the point: the company is anticipating that full legalization in Texas is “inevitable” and its franchise development team is “preparing an aggressive growth campaign to re-introduce cannabis to an expanded marketplace”. Management projects that the convergence of coffee and cannabis products will be an effective way to reach consumers previously hesitant to cannabis consumption – which is no doubt the big point.

“We hope to complete our plans to merge and acquire internal and external brands and entities in Q2 and throughout the remainder of 2021,” stated MEDH CEO Hans Enriquez. “We look forward to a favorable outcome of the legislative session and expect expansion to the hemp and medical program in Texas. We are excited to execute our operational strategies in 2021 and prepare for the next phase of growth.”

MedX Holdings Inc (OTCMKTS:MEDH) 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, especially given its outlook on the Texas legislative context and the steps already underway to capitalize.

 

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.

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) just announced the acquisition of Indoor Garden & Lighting, a two-store chain of hydroponic equipment and indoor gardening supply stores serving the Seattle and Tacoma, Washington area. The Company will be consolidating its current Seattle operation into the acquired stores. This acquisition brings the total number of GrowGen hydroponic garden centers nationwide to 40 stores.

“We’re thrilled to kickstart 2021 with our acquisition of Indoor Garden & Lighting, which boasts a strong commercial customer base and a talented team of grow professionals,” said Darren Lampert, GrowGeneration’s CEO. “This deal expands our footprint in the Pacific Northwest and puts us in close proximity to Tacoma’s large commercial operators. With the addition of Indoor Garden & Lighting, we expect Washington’s thriving adult-use market to generate annual revenues of $10 million for GrowGen.”

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 GRWG shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -8% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.

GrowGeneration Corp (OTCMKTS:GRWG) pulled in sales of $55M in its last reported quarterly financials, representing top line growth of 152.6%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($55.3M against $20.9M).

Published by Pamela Garcia

Pamela Garcia is a keen follower of U.S. stock market

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