The Canadian marijuana stocks we’ve weeded out trade at a discount to its peers on an EV/EBITDA basis
SmallCapPower | June 12, 2019: The ratio EV/EBITDA is used to analyze and determine an organization’s return on investment, as well as its value. Today we have discovered four Canadian marijuana stocks that have an EV/EBITDA multiple less than its peers. For reference, the companies selected were averaged from a list of 97 companies that had an average multiple of 22.4x.
*Share prices as at close June 10, 2019, data obtained from S&P Capital IQ
Aleafia Health Inc. (TSX:ALEF) – $1.37
Aleafia Health is a vertically-integrated cannabis health and wellness company. The Company has four primary business units, which include: 1) Cannabis Cultivation & Production; 2) Health &Wellness Clinics; 3) Cannabis Education; 4) Consumer Experience with eCommerce, retail distribution and provincial supply agreements. The Company owns three cultivation facilities that include 1) Port Perry Facility, which is an indoor grow that is licensed and fully operational, 2) the Niagara Facility, which is a greenhouse in a plant-ready state that is waiting for a Health Canada cultivation license, and 3) the Paris Facility, which is a 25,000 sq.ft facility that is federally licensed for cultivation, processing and sale of medical and recreational cannabis. On June 10, 2019, the Company announced it received a new Standard Cultivation License issued by Health Canada’s Cannabis Regulations at the Port Perry Facility. This will allow the Company to begin its outdoor grow operation. This increases the Company’s licensed cultivation area from 22,000 sq.ft. to 314,000 sq. ft.
- Market Cap: $376.4 Million
- YTD Return: -6.3%
- EV/ EBITDA 2020E: 8.9x
- 90-Day Average Daily Volume (1,000): 1,528
Nextleaf Solutions Ltd. (CSE:OILS) – $0.50
Nextleaf is an extraction technology company that has created a portfolio of issued and pending patents for its unique, industrial-scale process of creating purified cannabinoid distillate. The Company plans to earn revenue from its intellectual property by offering B2B processing services to licensed cultivators and providing cannabis oil and extracts to licensed Canadian and international partners under the client’s own brand. The Company has completed construction of its extraction and processing facility that is located in Greater Vancouver, British Columbia. The processing facility also includes space for research and laboratory infrastructure.
- Market Cap: $53.6 Million
- YTD Return: 22.0%
- EV/ EBITDA 2020E: 5.3x
- 90-Day Average Daily Volume (1,000): 1,467
Valens GroWorks Corp. (CSE:VGW) – $3.88
Valens GroWorks is a pure-play cannabis extraction company operating out of a 25,000 sq. ft extraction, post processing and analytical testing facility in Kelowna, British Columbia. In February 2019, the Company announced its strategic expansion to over 50,000 sq. ft by acquiring two adjacent properties. On April 29, 2019, Valens announced it was the first third-party cannabis extraction company in Canada to achieve organic certification for cannabis oil production from Pro-Cert Organic Systems Ltd. for its proprietary CO2 and ethanol extraction processes. On June 10, 2019, Valens expanded its agreement with Tilray for 15,000 kg annually for two years to 60,000 kg. As well, the Company will now offer contract manufacturing services for tincture bottles and gel caps as well as the option to offer services for other product formats, such as vaporizer cartridges.
- Market Cap: $466.8 Million
- YTD Return: 164.2%
- EV/ EBITDA 2020E: 6.2x
- 90-Day Average Daily Volume (1,000): 1,051
PharmaCielo Ltd. (TSXV:PCLO) – $6.79
PharmaCielo focuses on cultivating, processing and supplying medicinal-grade cannabis in Colombia. The Company has 15 million sq. ft of available cultivation capacity. The Company has reached an agreement with UBIQUO, a Colombian telemedicine, medical patient and e-health platform, to buy the company and operate its system. UBIQUO currently has more than 80,000 patients. On June 8, 2019, the Company expressed its intent to acquire CBD products company Creso Pharma.
- Market Cap: $654.8 Million
- YTD Return: 14.7%
- EV/ EBITDA 2020E: 16.6x
- 90-Day Average Daily Volume (1,000): 209
Aleafia Health Inc. (TSX:ALEF) and Nextleaf Solutions Ltd. (CSE:OILS) are featured sponsored companies and have paid SmallCapPower.com a fee for coverage. To learn more, see our full disclosure HERE >>
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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