For Supreme Cannabis (TSX:FIRE) (OTCMKTS:SPRWF) in particular and marijuana stocks in general, 2019 has been a rough year. Issues ranging from uncertainty over Canada’s national elections to slow rollout of marijuana shops in Canada, which has led to slow development of the country’s legal marijuana market, sparked a widespread selloff in marijuana stocks this year. Trading at about $0.50 currently, SPRWF stock is down more than 70% from its 2019 peak of about $1.76 reached in February.
But SPRWF doesn’t belong at $0.50. SPRWF spots Wall Street average price estimate of $1.38, which basically indicates the stock will more than double next year.
Below we discuss why SPRWF may be one of those marijuana stocks to own in 2020. But first, get to understand the marijuana company we’re talking about.
About Supreme Cannabis
For investors who may have just come across Supreme Cannabis for the very first time, here’s what you need to know about the company. SPRWF is a Canadian marijuana company focused on the premium products market. The company owns and operates a diversified portfolio of marijuana businesses and brands. Although Canada is SPRWF’s primary market, the company is also expanding into other countries.
Investors have generally punished marijuana stocks this year and SPRWF has not escaped the impact. But here are three reasons SPRWF comes across as an attractive marijuana stock to buy going into 2020.
- SPRWF is underway with a major business model transition that should boost profit margins down the road
Supreme Cannabis is transitioning from being a wholesale marijuana supplier to a consumer-facing brand. Considering that wholesale is generally a low-margin business, the transition should boost SPRWF’s profitability.
Supreme Cannabis delivered industry-leading gross margin of 62% in the third quarter, which should improve once the company completes the transition from wholesale to consumer-focused business.
Supreme Cannabis grew revenue by 122% year-over-year to C$11.4 million in the third quarter. The company remains well-capitalized to pursue its development and transformation initiatives. It finished the third quarter with C$36.4 million in cash reserve. Just to ensure that its way to stays ready to seize on the opportunities as they arise, SPRWF has secured a C$90 million credit facility from Bank of Montreal.
- SPRWF is ready to take full advantage of Canada’s expanded marijuana market
In a few days, the sale of newly approved recreational marijuana products will begin in Canada. Experts see Canada’s recreational marijuana market doubling to C$2.4 billion next year thanks to sale of newly approved pot products. SPRWF has prepared itself well to take full advantage of Canada’s expanded marijuana market. In June, Supreme Cannabis made a strategic acquisition to better position itself in Canada’s marijuana market. It bought Blissco, a wellness cannabis brand operating out of British Columbia. Last month, Blissco launched a CBD oil product called Pūr Dew that will appeal to both medical and recreational marijuana markets.
“We are excited to expand our product offering to include CBD, arguably one of the fastest growing product segments on the market. Pūr Dew can be taken directly or mixes well into beverages, such as smoothies,” commented Navdeep Dhaliwal, CEO of Supreme Cannabis.
Another move Supreme Cannabis has made to take advantage of Canada’s expanded recreational marijuana market is entry into premium vape pens market. In June, SPRWF partnered with Pax Labs to sell its PAX Era vape pen brand in Canada. Notably, SPRWF is one of only four Canadian marijuana companies that Pax Labs selected to distribute its PAX Era vape pens in the country. The other three are Aurora Cannabis Inc. (NYSE: ACB), Aphria Inc. (TSX: APHA) (NYSE: APHA), (TSX: ACB) and Organigram Holdings Inc. (NASDAQ: OGI).
- SPRWF has entered Europe’s booming CBD market
In June, Supreme Cannabis launched a Europe-focused investment arm called Supreme Heights, which is based in the UK. Through Supreme Heights, SPRWF will identify and invest in opportunities in CBD products space across Europe. Now that is a big deal. Europe has one of the fastest-growing CBD products markets in the world. Europe’s CBD products market is forecast to grow from $416 million in 2019 to $1.7 billion in 2023.
While Supreme Cannabis has plunged this year, it is hard to dispute that this is one marijuana stock that could deliver excellent returns for investors who can see the bigger picture and pick up the stock at a steep discount now going into 2020.
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Disclosure: We have no position in Supreme Cannabis and have not been compensated for this article.
Forget APHA and ACB, Buy GTBIF and TCNNF
There are a lot of misconceptions going on when it comes to US legalization. Many investors are buying Aphria (APHA) and Aurora Cannabis (ACB) hoping to bank on what’s happening in the US. However, they are Canadian Licensed Producers and have no business in the US. Investors are buying them because they trade on the major exchanges, but that is the wrong move. The correct move is to buy the US multi-state operators like Green Thumb Industries (GTBIF) and Trulieve Cannabis (TCNNF).
On Election Day voters in New Jersey, Arizona, Montana and South Dakota voted to legalize recreational marijuana. South Dakota and Mississippi voters also approved measures to legalize medical marijuana.
There’s also the prospect of a more pot-friendly White House with President-elect Joe Biden. Vice Presidential Candidate Kamala Harris said at the debate a Biden administration would decriminalize marijuana at a federal level and expunge criminal records of people with marijuana-related offenses.
Green Thumb Industries Inc. (“Green Thumb”), a national cannabis consumer packaged goods company and retailer, promotes well-being through the power of cannabis while giving back to the communities in which it serves.
Green Thumb manufactures and distributes a portfolio of branded cannabis products including Beboe, Dogwalkers, Dr. Solomon’s, incredibles, Rythm and The Feel Collection.
The company also owns and operates rapidly growing national retail cannabis stores called Rise™ and Essence. Headquartered in Chicago, Illinois, Green Thumb has 13 manufacturing facilities, licenses for 96…
What Do Investors See In Medical Marijuana Stock (OTCMKTS:MJNA)?
Medical Marijuana Stock (OTCMKTS:MJNA) has emerged as one of many investor’s favorite pot stocks in the legal cannabis universe in 2020. The stock is already up about 10% in 2020, demonstrating how investors have warmed up to the stock early on in the New Year.
Following a disastrous 2019, cannabis investors lost money but have also learned that their best bets are stocks with strong fundamentals. They are looking for companies that have positioned themselves well in the cannabis industry and have what it takes to go for the opportunities. That is why MJNA stock is catching a lot of investor attention in 2020 because of how it has positioned itself in the cannabis market.
Robust revenue growth and strong financial position have also helped put MJNA on the radar of investors hunting for quality cannabis stocks. Revenue at MJNA more than doubled from $26.5 million in 2017 to $60 million in 2018. MJNA is also not in financial distress as may be the case with other cannabis companies out there. The company finished the third quarter, the most recent reported period, with $5.5 million in cash reserves.
Moreover, MJNA has recently taken steps to expand into new international markets and invest in companies that are leaders in their segments. These prudent actions are helping lift Medical Marijuana stock as more investors learn about them.
About Medical Marijuana stock
Is Tilray Inc (NASDAQ:TLRY) A Buy Or Sell?
For Tilray Inc (NASDAQ:TLRY) and the rest of cannabis stocks, 2019 was no doubt a bad year. But 2020 is shaping up to be a promising year for the stock. To start with, Tilray stock has already gained 8.35% year-to-date. If that says anything, it shows following the broad selloff in Tilray stock last year, we’ve got to a point where sellers are giving way to buyers in the stock.
There are several catalysts that should continue driving NASDAQ:TLRY as you’re about to see. First, below is a brief profile of the company we’re discussing.
Tilray is a Canada-headquartered global cannabis company. It is engaged in activities of cannabis cultivation and processing as well as marketing and distribution of cannabis products. Tilray already has several cannabis products brands to its portfolio. It operates across five continents through subsidiaries in Canada, Australia, Germany, and Portugal.
Following the broad collapse of cannabis stocks in 2019, investors are looking for cannabis stocks that can make a positive impact on their portfolios in 2020. Tilray stands out as an attractive cannabis stock pick in 2020. Here are some of the exciting things about the company.
Tilray CEO sees a bright future for the cannabis industry
On January 25, Tilray CEO Brendan Kennedy spoke on Bloomberg. In that interview, Kennedy framed a rosy outlook for the…