What's The Real Value Of Smaller And Under-Covered Cannabis Stocks?
Portfolio Pulse from Viridian Capital Advisors
The article discusses the credit quality and valuation of eight public U.S. cannabis companies with market caps over $20M and coverage from fewer than two sell-side analysts. Planet 13 (OTC:PLNHF), Grown Rogue (OTC:GRUSF), C21 Investments, and Cansortium (OTC:CNTMF) are identified as investable and well-priced. However, the companies on the right of the graph, including Goodness Growth (OTC:GDNSF), have negative cash flow from operations, high debt/mkt cap, and challenged profitability.
July 11, 2023 | 5:18 pm
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NEGATIVE IMPACT
Goodness Growth has negative cash flow from operations, high debt/mkt cap, and challenged profitability. However, it is considered a logical takeout candidate.
The company's negative cash flow, high debt, and challenged profitability make it a risky investment. However, its potential as a takeout candidate could offer some upside.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 90
NEUTRAL IMPACT
Cansortium ranks as the fourth strongest credit in the group. The company carries a significant amount of debt at 3.5x debt/ mkt cap and 2.44x debt (including leases) to annualized adjusted EBITDA.
The company's strong credit ranking makes it an attractive investment. However, its significant debt could be a concern.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 90
POSITIVE IMPACT
Grown Rogue trades at 1.22x annualized revenues and ranks as the second-best credit of the group, with the best leverage, second-best profitability, and third-best liquidity.
The company's strong credit ranking, leverage, profitability, and liquidity make it an attractive investment.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
Planet 13 is the cheapest company of the group based on EV/Revenues and the top-ranked credit, largely due to its debt-free position and strong liquidity. However, profitability has been poor.
The company's debt-free position and strong liquidity make it an attractive investment. However, its poor profitability could be a concern.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90