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What the Future Holds for CBD and Hemp Stocks (CVSI, SDEC, ACB, CURLF)

Investors interested in hemp and CBD stocks face a very interesting and unexpected problem: the growth outlook for CBD and hemp is undisputed. But there are already so many producers out there vying for that market that investors have been burned.

Here, we take a look a look at some different opportunities that may lead to that pot of gold at the end of the CBD rainbow: CV Sciences Inc (OTCMKTS:CVSI), Smart Decision, Inc. (OTCMKTS:SDEC), Aurora Cannabis Inc (NYSE:ACB), Curaleaf Holdings Inc (OTCMKTS:CURLF).

 

CV Sciences Inc (OTCMKTS:CVSI) is an established leadership play in the space in terms of volume of CBD oil sold and distribution footprint.

To add to that status, the company recently 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. According to the release, PlusCBD Oil products are available at these stores as of November 3, 2019.

“We are excited to further expand availability of our topicals and award-winning dietary supplements in the food, drug and mass retail channel through our new partnership with Southeastern Grocers, one of the largest supermarket companies in the U.S.,” added Dowling. “Following our initial launch, we anticipate additional distribution gains across the Winn-Dixie and BI-LO banners and new distribution with SEG’s other leading retail banners.”

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.

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.

The stock has suffered a bit of late, with shares of CVSI taking a hit in recent action, down about -19% over the past week.

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).

 

Smart Decision, Inc. (OTCMKTS:SDEC) is possibly the most interesting name on this list because it represents something new in the space.

The company is a next-generation consumer-based CBD algorithm innovator that has designed a proprietary, patent-pending “Smart Decision” algorithmic CBD product platform (CBDSmartDecision.com) geared toward aiding consumers in selecting the right CBD-based products to suit their specific needs.

“The CBD market has expanded at such a rapid pace, with so many new adopters and first-time consumers, that consumer choice complexity has become a major opportunity,” noted Adam Green, CEO of Smart Decision, Inc. “After you weed out the low-grade products produced outside of FDA compliant facilities, you’re still left with enough permutations – potency, volume, grade, delivery mechanism, bioavailability – to make the average consumer’s head spin. There’s currently nothing out there to help people find the right product in a simple, easy-to-use interface. We have created a patent-pending system to do just that. Now, we have teamed up with the brilliant folks over at RedBand to bring it to life.”

The big value here is that SDEC is NOT a CBD producer. They aren’t baying with the pack at the moon. They are standing on a different mountain with an entirely different value proposition and valuation argument.

But, and the this is the big point, this stock will still benefit from the overall growth picture in the CBD space.

“There are simply too many CBD producers out there already,” continued Green. “But the fact of monstrous growth in the CBD market is still very real because this market is finally going ‘mainstream’ after years of confinement as a niche market. We firmly agree with the experts that CBD is going to be everywhere. But there are already so many options out there that the big value-add now is on the consumer-facing side, helping new adopters simplify the process of finding what they need. We are on our way to assuming a leadership position in that niche.”

 

Aurora Cannabis Inc (NYSE:ACB) has shown us a line of evidence in its strategic moves over the past 24 months to clearly signal that it wants to be a major player in the CBD boom.

For example, in 2017, the company invested in Hempco, a Vancouver-based maker of hemp-based foods, hemp fiber, and hemp nutraceuticals. Hempco also supplied Aurora with raw hemp for extracting CBD. ACB bought the rest of Hempco three months later.

The company next acquired Agropro, Europe’s largest producer, processor, and supplier of certified organic hemp and hemp products. At the same time, Aurora acquired Agropro’s sister company Borela, which processes and distributes organic hulled hemp seeds, hemp seed protein, hemp flour, and hemp seed oil.

Just after that, in late 2018, Aurora acquired ICC Labs, which claims leadership in the South American hemp CBD market, with a large-scale extraction facility that can process 150,000 kg of CBD feed annually.

That’s three big M&A moves in the past 30 months with one clear goal: to capture major market share in the CBD space. And it spans three different continent. This is a company on a mission and investors who believe in the larger growth thesis should take note now.

Aurora Cannabis Inc (NYSE:ACB) managed to rope in revenues totaling $98.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 416.7%, 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 ($362M against $436.4M, respectively).

 

Curaleaf Holdings Inc (OTCMKTS:CURLF) is another primarily cannabis name to make clear moves toward the CBD space. This is likely to be linked with its existing distribution footprint, which keeps expanding by the month.

As a case in point, the company recently announced the opening of its 28th Florida dispensary at 1435 South Tamiami Trail in Sarasota. Curaleaf has the largest cannabis dispensary footprint in the US with 51 dispensaries across the country, and continues to execute on its strategy of rapid expansion in Florida.

“We are proud to deliver upon our commitment to expand our Florida footprint, providing patients with access to Curaleaf’s premium medical cannabis products and educational resources, and serving the Sarasota community 7 days a week,” said Pablo Arizmendi-Kalb, President of Curaleaf Florida.

Curaleaf Holdings Inc (OTCMKTS:CURLF) promulgates itself as a company that operates as an integrated medical and wellness cannabis operator in the United States.

The Company is the parent of Curaleaf, Inc., a leading vertically integrated cannabis operator in the United States. Headquartered in Wakefield, Massachusetts, Curaleaf, Inc. has a presence in 12 states.

Curaleaf, Inc. operates 30 dispensaries, 12 cultivation sites and 9 processing sites with a focus on highly populated, limited license states, including Florida, Massachusetts, New Jersey and New York. Curaleaf, Inc. leverages its extensive research and development capabilities to distribute cannabis products in multiple formats with the highest standard for safety, effectiveness, consistent quality and customer care. Curaleaf is committed to being the industry’s leading resource in education and advancement through research and advocacy.

Curaleaf Inc.’s Florida operations were the first in the cannabis industry to receive the Safe Quality Food certification under the Global Food Safety Initiative, setting a new standard of excellence.

Shares of the stock have powered higher over the past month, rallying roughly 23% in that time on strong overall action.

Curaleaf Holdings Inc (OTCMKTS:CURLF) managed to rope in revenues totaling $81.6M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 192.3%, 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 ($120.8M against $98.5M).

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 ([email protected]) or his Google+ page (https://plus.google.com/103338576216002376250).



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