Alcohol and Cannabis Has Been a Good Mix For This Canadian Retailer

Alcanna Inc. (TSX:CLIQ) shares have gained more than 22% since Capital Ideas wrote about the company about seven weeks ago

Capital Ideas Media | February 25, 2021 | SmallCapPower: Consumer cannabis and alcohol demand in Canada has continued to grow and the pandemic may actually be fueling this growth.

(Originally published on Capital Ideas Media on January 5, 2021)

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All of which appears to be benefitting Alcanna Inc. (TSX:CLIQ), Canada’s largest private sector alcohol retailer with 211 locations in Alberta and British Columbia and owner of 34 cannabis retail outlets in Canada.

[Editor’s Note: Shares of Alcanna have gained more than 22% since Capital Ideas wrote about the company about seven weeks ago.]

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During Q3 2020, the Company reported revenue that rose 11% year-over-year to $211.5 million with same-store liquor sales up 14.7% for the quarter and total cannabis store sales climbing 23.6% to $16.0 million.

This helped Alcanna swing to a quarterly profit of $0.14 per share from a loss of $0.12 during the same period last year.

The Company acknowledged COVID-19’s role in its performance, as alcohol consumption has shifted mostly to people’s homes given that sales in public venues such as restaurants, bars, lounges, and sporting events have either been eliminated or severely restricted.

“Alcanna’s favourable positioning during the pandemic showed no signs of slowing down in Q3, and we suspect Q4 will be no different,” said CIBC World Markets analyst John Zamparo in a recent note.

“The company plans to introduce new customers to its Wine and Beyond stores, and post-vaccine, will likely continue to dominate the Alberta discount market, and should generate meaningful FCF until then. With multiple examples of improved capital allocation, ongoing improvements to fundamental performance and the potential catalyst of a reinstated dividend or initiation of a share buyback (and no concerns of an upcoming equity raise), we remain bullish on the stock,” he added.

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