The U.S. cannabis retail stocks we’ve weeded out are trading below the average of their peers
SmallCapPower | January 15, 2019: Today, we have identified four U.S. cannabis retail stocks trading below the average of their peers on an Enterprise Value/Sales basis.
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*Share prices as at close January 11, 2019, data obtained from S&P Capital IQ
** All balance sheet data as of most recent financials; forward multiples based on consensus estimates
Planet 13 Holdings Inc. (CSE:PLTH) – $1.62
Cannabis
Planet 13 Holdings is a vertically-integrated cannabis company currently focused on the state of Nevada. The Company holds two cultivation licenses (current capacity 2,100 lbs. / 953 kg per year), two production licenses (2,300 sq. ft) and two dispensary licenses. PLTH’s two dispensaries include a 16,200 sq. ft superstore on the Las Vegas Strip that services 1,400 customers a day with an average spend of US$75 per customer, as well as a 2,300 sq. ft dispensary located 6.5 miles (10.5 km) from the Las Vegas Strip, servicing 776 customers a day with an average spend of US$70. Planet 13 is planning on expanding its retail footprint into California.
2019E EV/Sales Multiple: 2.1x
- Market Cap: $207.9 million
- Total Return 7 days: +4.5%
- Total Return 30 days: +31.7%
Harvest Health & Recreation Inc. (CSE:HARV) – $6.80
Cannabis
Harvest Health & Recreation is a vertically-integrated multi-state operator (MSO) that holds over 60 licenses nationally and has a retail footprint across 12 U.S. states. Within the next 18 months, Harvest plans to cultivate more than 720,000 square feet of indoor, outdoor and greenhouse cannabis. The Company believes that its vertical approach to design, construction, and implementation should result in low production costs. On December 26, 2018, the Company received one of only two licenses to operate a dispensary in Santa Monica, California. On January 14, Harvest announced that the Ohio Department of Commerce will award the Company a provisional processor license. With the permit, Harvest will hold a processing license, a Tier 1 cultivation license, and three retail dispensary licenses in Ohio, making it the only multi-state operator to be organically vertically integrated in the state.
2019E EV/Sales Multiple: 2.2x
- Market Cap: $458.8 million
- Total Return 7 days: -2.9%
- Total Return 30 days: +4.6%
Trulieve Cannabis Corp. (CSE:TRUL) – $11.51
Cannabis
Trulieve is a “seed-to-sale” operation in the state of Florida, with plans to acquire additional facilities outside of Florida in 2019. The Company operates a 507,000 sq. ft facility, yielding 19,500 kg annually. Additionally, Trulieve has expansion plans to add another 127,500 sq. ft, which would increase production by 10,215 kg. TRUL also has a network of 20 dispensaries selling branded products, with a total of 125 stock keeping units (SKUs) and 94,000 patients. Cannabis is currently only legal for medical use in Florida.
2019E EV/Sales Multiple: 5.7x
- Market Cap: $1,286.0 million
- Total Return 7 days: -0.3%
- Total Return 30 days: +9.0%
Cresco Labs Inc. (CSE:CL) – $8.70
Cannabis
Cresco Labs is a vertically-integrated cannabis company with cultivation, manufacturing, and retail dispensary businesses. The Company has retail locations across six states: Illinois, Nevada, Ohio, Arizona, Pennsylvania, and California. Cresco is expected to commence cultivation, manufacturing, and retail dispensary operations in New York, Michigan, Massachusetts and New Jersey in 2019. On December 20, 2018, the Company announced that it had acquired an additional two license medical cannabis dispensaries in Illinois (MedMar Rockford and MedMar Lakeview). CL’s leading brands include: 1) Mindy’s Edibles – a fun line of fruit-forward gummies, hard sweets and chews, 2) Reserve Premium Cannabis – for the cannabis connoisseur, and 3) Remedi Medical – designed for the medically-minded patient with a balance of CBD and THC levels.
2019E EV/Sales Multiple: 6.0x
- Market Cap: $199.2 million
- Total Return 7 days: -4.1%
- Total Return 30 days: +15.2%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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