One cannabis company in Las Vegas has really piqued your interest…
I normally like to answer several questions on Saturday in our weekly Q&A sessions.
However, I wanted to really spend some time on answering one question this week because I believe it will help a lot of our members out.
Todd B. asks: “Greg I will be in Vegas next week. So, should I go visit Planet 13 and if so what should I look for and observe while in the store and should I ask to speak to anyone in particular while there? I am not meaning this from a recreational standpoint, but as a serious investor. Thank you.”
That’s a great question, Todd! As you may recall, I recently talked about Planet 13 Holdings Inc. (CSE: PLTH, OTC: PLNHF) last Friday in Cannabis Profits Daily, and I have a more detailed report about the company in our monthly issue for Cannabis Investor’s Report members.
I would encourage you to visit Planet 13 if you are considering it as an investment and have the time to visit the location. To clear, Planet 13 isn’t one of our recommendations.
But if you are planning to buy shares, I think it’s a good idea for you to do your due diligence. That can include using tools like our NICILytics database, where we have in-depth analysis on over 170 companies. To make it easier for you, we give them all a 0 through 5 rating based on the quality of a company. You can read about the NICILytics rating system in this free guide.
You can make observations on how many people are in the store, watch the staff interactions with customers, review the branding and product displays to see if they are cohesive, and just get a feel if you think the current business model would work in different states.
If possible, we would love for you to share with your fellow members your observations, and we hope you have a safe and enjoyable trip!
However, after you make your observations, using these criteria I’m about to share, you’ll know exactly whether Planet 13 is the right investment for you…
Personal Research and Earnings Reports
One of the things I do on a regular basis is a little in-store research of my own. I visit pharmacies and grocery stores and take a look at the CBD products on the shelves.
Then, I take a look at earnings reports to give me a true understanding of what’s going on.
I wrote before that most eyes glaze over when an earnings report comes out. There is a lot of financial jargon that just turns folks off.
However, earnings reports are a great tool if you know what to look for, especially when you combine that with your own personal observations from visiting a store.
For Planet 13 specifically, you can access their Q1 earnings report right here.
Here are the three things to focus on in an earnings report.
Three Things to (Usually) Focus On
Looking at where companies operate and their expansion plans are important tidbits to review during an earnings release.
Some states are better than others for near-term revenue generation. But, in the long battle to build a national brand, more states is better.
Alternatively, a company can have its full focus on a single state, making it an attractive acquisition candidate. If a company is only in two or three states and doesn’t have a clear path to entering more, it’s reasonable to ask the company’s executives during an earnings call whether they see the company as an attractive acquisition candidate or what the company’s plans are for the day it is surrounded by bigger, better-financed competitors.
The second thing to usually focus on is cash and cash burn. Most cannabis companies are losing money on an operating basis, and they are spending millions of dollars in capital expenditures.
That’s fine, because they are spending in anticipation of future revenues. In other words, they think that how they are spending their money now will make them even more money in the future.
However, they can’t do that forever.
Looking at how much cash the company has left and how much it is using per quarter can give you a rough idea of when the company must turn profitable or raise more capital before it may be forced to shut its doors.
When a company makes its more complete regulatory filings, focus on a section called “liquidity and capital resources,” or something with a similar name for more details.
Finally, take a look at the projections a cannabis company releases during its earnings.
If a company beats its public projections, its stock price will generally go up. If company executives fall short of the projections they made, the stock price will almost certainly go down.
I hope you find these tips helpful for your own cannabis investments.
Executive Director, National Institute for Cannabis Investors
P.S. Analysts believe the CBD market alone could grow more than 15 times faster than the cannabis industry as a whole in the coming year. We firmly believe that this niche sector of the cannabis market could be your ticket to the life you’ve always wanted.
7 responses to “Researching Cannabis Profit Opportunities Right at the Source”
June 15 2019