The Canadian marijuana stocks we’ve identified have Low EV/Sales Ratios, offering investors a potential cannabis value play
SmallCapPower | November 5, 2018: Today we have uncovered three Canadian marijuana stocks trading at low 12-month forward Enterprise Value to Sales ratios. All the companies we have selected trade below 4x EV/Sales, potentially offering investors a better value play. For comparison, Canopy Growth Corp. (TSX:WEED) trades at a 12-month forward EV/Sales multiple of 22x, while Aphria trades at a multiple of 13x. As such, for investors looking for value in an industry plagued with high valuations, these companies may be a good place to start. Note: All metrics reflect closing prices as at November 1, 2018.
Emblem Corp. (TSXV:EMC) – $1.18
Emblem is a licensed producer of medical marijuana under the ACMPR. The Company, led by former healthcare & pharma executives, currently produces 2,000 kg/yr of dried cannabis and plans to add a further 15,000 kg/yr by Q1/2019. On June 20, 2018, Emblem announced the formation of a joint venture with German pharmaceutical wholesaler Ancos Pharma GmbH under the name “Emblem Germany,” allowing the Company to export cannabis products into Germany. Under this agreement Emblem would hold 60% ownership of Emblem Germany and Acnos would own the remaining 40%. The agreement was finalized on October 24, 2018.
- Market Cap: $145.2 Million
- 1 Month Returns: -25.3%
- YTD Returns: -51.6%
- 12-month Forward EV/Sales: 3.2x
Sunniva Inc. (CSE:SNN) – $4.88
Sunniva is a Canada-based producer of medical marijuana. The Company is vertically integrated with operations divided between production, clinics, and paraphernalia. SNN currently has more than 100,000 patients registered in its clinics. In June 2018, the Company’s subsidiary, CP Logistics LLC, secured a 12-month extraction services agreement with Cali Gold and Farmacy Phactory, two leading California cannabis brands. The Company is currently expanding its existing facility with a focus on expanding production yield to 200,000 kg/year by 2020. On October 17, 2018, Sunniva announced it had signed an LOI to acquire the Oakland Vision, which operates a cultivation facility in California. The consideration price is US$1 million, with the potential for an additional US$2 million if certain milestones are met.
- Market Cap: $177.8 Million
- 1 Month Returns: -8.6%
- YTD Returns: -45.4%
- 12-month Forward EV/Sales: 1.7x
Planet 13 Holdings Inc. (CSE:PLTH) – $2.30
Planet 13 Holdings operates a number of cultivation facilities and dispensaries across Nevada. Its products include flower, concentrates, vape pens, and edibles. On November 1, 2018, Planet 13 intends open its largest dispensary to date, located adjacent to the Las Vegas strip. The dispensary is projected to serve over 2,000 customers daily and will cover more than 40,000 square feet. The Company reported US$1M in EBITDA for the first half of 2018.
- Market Cap: $142.7 Million
- 1 Month Returns: -8.4%
- YTD Returns: +130.0%
- 12-month Forward EV/Sales: 3.5x
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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