The Canadian marijuana stocks we’ve weeded out are trading at a discount to peers based on 2020E sales
SmallCapPower | April 25, 2019: Today we have identified four Canadian marijuana stocks that are trading at a discount to peers based on 2020E sales. The 2020E industry average of EV/Sales multiple is currently 8.1x. With Canadian marijuana stocks being volatile, we believe these stocks will provide relative stability in the future through their low EV/Sales multiple. The four companies listed have an average EV/Sales multiple of 2.5x, trading at three times the discount compared to its peers.
*Share prices as at close April 24, 2019, data obtained from S&P Capital IQ
Aleafia Health Inc. (TSX:ALEF) – $1.65
Aleafia is a vertically-integrated cannabis company that operates throughout Canada serving approximately 50,000 patients. ALEF has four primary business operations: Cannabis Cultivation & Products, Health & Wellness Clinics, Cannabis Education, and Consumer Experience with eCommerce, retail distribution and provincial supply agreements. On April 23, 2019, Aleafia was added to the AdvisorShares Pure Cannabis ETF (NYSE:YOLO).
- EV/Sales: 2.9x
- Market Cap: $462.3M
- YTD Return: 20.6%
- 30-Day Average Volume: 1,500,000
- 90-Day Average Volume: 1,800,000
Village Farms International Inc. (TSX:VFF) – $16.69
Village Farms International is a vertically-integrated greenhouse grower in North America, and the only publicly-traded greenhouse produce company in Canada. The Company focuses on producing and distributing fresh, premium-quality produce to national grocers in Canada and the U.S. from its ~9 million sq. ft. of its Controlled Environment Agriculture (CEA) greenhouses in British Columbia and Texas. On April 17, Citron Research published a report attacking VFF’s JV partner, causing its share price to drop 14.4% in one day. Since then, the Company has almost recovered from this short position.
- EV/Sales: 2.7x
- Market Cap: $721.6M
- YTD Return: 210.3%
- 30-Day Average Volume: 2.900,000
- 90-Day Average Volume: 2,500,000
The Supreme Cannabis Company Inc. (TSX:FIRE) – $1.99
The Supreme Cannabis Company is a Canadian publicly-traded company committed to providing premium brands and products that proudly reflect its consumers, people and uniquely innovative culture. The Company’s portfolio includes its wholly-owned subsidiary and multi-award-winning brand, 7ACRES. 7ACRES is a federally-licensed producer of cannabis operating inside a 440,000-square-foot facility in Kincardine, Ontario. On April 22, the Company announced the launch of Cambium Plant Sciences. Cambium Plant Sciences will be focused on developing the next generation of premium cannabis strains for recreational and medicinal purposes, aiming to lead the agricultural revolution of cannabis genetics, redefining consumer experiences and cultivation economics across global cannabis industry.
- EV/Sales: 2.9x
- Market Cap: $575.2M
- YTD Return: 32.9%
- 30-Day Average Volume: 650,000
- 90-Day Average Volume: 1,300,000
VIVO Cannabis Inc. (TSXV:VIVO) – $0.86
Formerly known as ABcann Global Corporation (TSXV:ABCN), Vivo Cannabis manufactures and distributes medical cannabis. The Company gained its production and sales license from Health Canada in April 2018. Vivo’s capacity estimates for 2019 include 1,500 kg of cannabis grown indoor with 14,000 kg being grown in greenhouse facilities. On March 22, Vivo announced Health Canada approval for its Hope expansion, doubling the production capacity in British Columbia. The Company announced on April 10 that they would issue its fiscal four quarter and full year 2018 financial and operating results before the markets open on April 30, 2019.
- EV/Sales: 1.5x
- Market Cap: $253.5M
- YTD Return: 13.2%
- 30-Day Average Volume: 500,000
- 90-Day Average Volume: 940,000
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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