Liberty Health Sciences Inc (CNSX:LHS) (OTCMKTS:LHSIF) Is A Bright Spot Among Marijuana Stocks

Liberty Health Sciences Inc (CNSX:LHS) (OTCMKTS:LHSIF) is one of the names leading the recovery of marijuana stocks following recent months of selloff that saw many marijuana stocks plunge to multiyear lows. Liberty gained 26% in November. Moreover, Liberty has gained more than 80% from its lowest watermark this year. The stock currently trades at $0.55.

The recovery in Liberty Health Sciences has come on the back of the company reporting strong quarterly results and advancement in efforts to federally legalize marijuana in the United States. Let’s look at each of these major Liberty stock drivers in little more detail.

On October 31, Liberty released its 2020 fiscal second-quarter financial results, which is for the three months ended August 31. Net revenue for that period increases 380% year-over-year to C$10.6 million. The revenue growth was driven by Liberty expanding its retail network, particularly the opening of more marijuana shops. Liberty also turned a profit, reversing a loss in the year-ago quarter. The strong financial results helped spark more investor interest in Liberty stock, which rose 30% soon after the results came out.

On November 20, the House Judiciary Committee passed the MORE Act, which seeks to decriminalize marijuana at the federal level. The bill promises to remove current barriers and significantly expand the domestic market for American marijuana companies like Liberty. Investors cheered the committee passage of the bill, driving up Liberty stock nearly 14%.

Liberty Health Sciences

For investors who may be learning about Liberty Health Sciences for the first time, here is a brief profile of the company. Liberty is a producer and retailer of marijuana products. It has several marijuana products brands to its credit already and continues to expand its product offering. Liberty has operations in Florida.

Here are four reasons you may want to buy Liberty stock this month

• Liberty stock still exhibits huge upside potential

Although Liberty is one of the names leading the recovery of marijuana stocks, it is still in the early stage of its breakout and there is a long runway ahead. At the current price of $0.55, the stock is still 40% below its 2019 peak and 98% below its all-time high. Therefore, Liberty stock has huge potential to deliver excellent returns from current levels.

• Liberty is well-capitalized to pursue its expansion goals

Not all marijuana companies out there have a ready pool of cash they can tap to fund their development projects. Therefore, Liberty stands out as one of the well-capitalized marijuana companies out there. The company finished its 2020 fiscal second quarter with C$24 million in cash reserve. In fact, the reserve grew from C$13 million in the previous quarter.

Liberty is currently in expansion mode. The company is working to increase its Florida production, expand its distribution network, which it is doing through the opening of more retail outlets. The company currently operates 19 marijuana shops in Florida, up from eight in January. Moreover, Liberty is working to expand its product portfolio to be in every segment of the marijuana market in Florida.

On product portfolio expansion side, Liberty recently added a vape pen to its product offering in partnership with Grenco Science.

When complete, the expansion drive should allow Liberty to generate more revenue, profit and build a stronger war chest for future development.

• Liberty has huge growth potential in its Florida market

Florida is one of the most promising marijuana markets in the United States. Florida’s marijuana sales generated around $630 million in revenue in 2018. That is expected to almost triple to $1.6 billion by 2022. Therefore, Florida is on track to become the third-largest marijuana market by revenue in the US. But we are only talking about the sale of medical marijuana products because that is what is currently approved in the state. There are efforts to make recreational marijuana also legal in Florida, which if successful would significantly expand Liberty’s market opportunity in the state.

• Liberty management doing a great job to clear investor doubts about marijuana stocks

Some investors still have doubts about marijuana stocks. That stems from the fact that marijuana business is new and the industry is not currently well-established as say financial services or technology industries. But that doesn’t mean there are no great investment opportunities in the marijuana sector. Liberty management understands that keeping investors on the loop is a great way to tackle the trust problem that still persists in the marijuana sector. Therefore, every few days or weeks Liberty issues updates on its business, from the progress it has made recently to what it plans to do next.

Bottom line

Liberty Health Sciences’ recovery so far confirms that this is a marijuana stock that can pull up from the bottom and deliver decent returns. The company’s strong financials, ongoing expansion, and transparent management further make it an attractive marijuana stock to own now.

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Disclosure: We have no position in Liberty Health Sciences and have not been compensated for this article.

Image by Zdeněk Tobiáš from Pixabay