The Canada-listed U.S. cannabis stocks we’ve weeded out trade a significant discount to 2020 sales
SmallCapPower | October 21, 2019: Given several weeks of weakness, in general, it appears cannabis investors are becoming more sophisticated, and are now looking towards fundamentals. The days of buying any cannabis stock and watching it go up seems to be over. Today we’ve identified four Canada-listed U.S. cannabis stocks trading at a significant discount to peers, which trade at an average of 1.0x 2020 EV/sales.
*Share price data as at October 18, 2019, data obtained from S&P Capital IQ
Cresco Labs Inc. (CSE:CL) – $8.31
Cresco Labs focuses primarily on cultivating medical-grade cannabis, manufacturing medical cannabis products, and distributing products to medical patients and recreational users. Currently, the Company has one of the largest footprints in the U.S., with operations in 11 states, 23 production facilities, 56 retail licenses and 22 operational dispensaries. On October 8, 2019, the Company announced the closing of its acquisition of 100% membership interests in Gloucester Street Capital, the parent entity of Valley Agriceuticals. Valley Agriceuticlas has one of the 10 vertically-integrated cannabis business licenses in the State of New York. On October 16, 2019, Cresco announced that it had received regulatory approval for five adult-use dispensaries in the state of Illinois, where recreational sales are expected to begin on January 1, 2020.
- Market Cap: $584.6M
- 7-Day Return: 21%
- 30-Day Return: -12%
- YTD-Return: -8%
- 2020 EV/Sales Multiple: 0.6x
Vireo Health International Inc. (CSE:VREO) – $1.71
Vireo Health cultivates cannabis in greenhouses, manufactures pharmaceutical-grade cannabis extracts, and sells its products at both company-owned and third-party dispensaries. The Company is licensed in 11 markets, including Arizona, Maryland, Massachusetts, Minnesota, New Mexico, New York, Nevada, Ohio, Pennsylvania, Puerto Rico, and Rhode Island. On October 17, 2019, VREO announced the launch of its new brand and products, 1937 Cannabis brand. 1937 Cannabis represents the Company’s first launch of a new cannabis brand and is the first time it offered dry flower. The 1937 Cannabis product line features dry flower and the Company expects to include concentrates later this year.
- Market Cap: $133.6M
- 7-Day Return: 10%
- 30-Day Return: -15%
- YTD-Return: -68%
- 2020 EV/Sales Multiple: 0.6x
TILT Holdings Inc. (CSE:TILT) – $0.33
TILT Holdings is a vertically-integrated infrastructure and technology cannabis company. The Company provides software, infrastructure, financing and additional services to cannabis retailers. The Company is organized in two units: Software & Services and Consumer Devices & Packaged Goods, to deliver end-to-end services and customer solutions. On October 18, 2019, TILT announced that its Commonwealth Alternative Care (“CAC”) asset has received local approval for adult-use cannabis sales at its retail store in Taunton, Massachusetts.
- Market Cap: $120.0M
- 7-Day Return: 43%
- 30-Day Return: -33%
- YTD-Return: -91%
- 2020 EV/Sales Multiple: 0.3x
SLANG Worldwide Inc. (CSE:SLNG) – $0.43
SLANG focuses on acquiring and developing market-proven regional brands and developing new brands to help meet the changing needs of cannabis users globally. The Company sells products at more than 2,600 stores across Arizona, California, Colorado, Florida, Oregon, Maine, Massachusetts, Michigan, Nevada, New Mexico, Vermont, Canada, Puerto Rico and Jamaica.
- Market Cap: $103.5M
- 7-Day Return: 0%
- 30-Day Return: -49%
- YTD-Return: -79%
- 2020 EV/Sales Multiple: 0.4x
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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