These Companies Are Capitalizing On The Booming Nevada Market
TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.
Nevada’s recreational marijuana market continues to record strong growth and the state has been blowing away expectations.
When compared to Colorado, Nevada’s recreational marijuana market has been generating significantly more revenue (four-months after the market opened).
During October, Nevada generated approx. $38 million in revenue from recreational marijuana. Four months after Colorado’s recreational marijuana market opened, the state generated approx. $22.5 million in revenue.
We are favorable on the Nevada marijuana market and stocks levered to this market have been performing extremely well.
Friday Night Announces a Transformational Acquisition
Last week, Friday Night (TGIF.CN) (TGIFF) and Body and Mind Inc. (BAMM.CN) (BMMJ) announced a transformational deal. Under the terms of the agreement, Friday Night will acquire BAM for approx. $115 million in stock.
We are very bullish on the combined company which would have 130,000 square feet of facility projects under development. This would make the combined company one of the largest cultivation and production companies in Nevada.
This is an attractive merger for several reasons. First, it is expected to be immediately accretive to cash flow. Second, economies of scale would significantly lower the per unit costs and would drive efficiencies such as packaging systems, extraction, dosing, testing, distribution, and marketing. Finally, the combined company would have an enhanced product line and higher production volumes.
Tahoe Hydro: An Emerging Opportunity
We are bullish on the Nevada medical marijuana opportunity and in November, we highlighted a company that we are favorable on. The company, ALQ Gold Corp. (name change underway) is positioned as an investment company and are planning an aggressive consolidation play with Nevada firmly in their sights.
ALQ’s first planned investment is a strategic play on the booming Nevada market. The company will first acquire Tahoe Hydro Corp., a Nevada-based cannabis cultivator that is the middle of a major expansion. At current production levels, Tahoe can generate $3.2 million in annual revenue. The company will be expanding its footprint and once the buildout is completed, the facility will be able to generate approximately $6.6 million per year out of its Carson City facility. We hear that this expansion is weeks away from completion.
We are favorable on the company’s multi-faceted growth strategy and its focus on making strategic investments in leading cannabis businesses. As these investments continue to execute, Tahoe plans to create value for investors by spinning-off these investments.
A Market Worth Watching
Although we are bullish on the companies levered to the Nevada marijuana market, investors must be selective and focus on companies that are executing on this burgeoning opportunity.
We continue to prefer companies that are generating revenue and recording strong growth, are led by a management team focused on creating value for shareholders, and are well capitalized and well positioned to execute on growth initiatives.
Once California’s recreational marijuana market opens next week, it will be interesting to see how the Nevada recreational marijuana market continues to perform.
Disclosure: This report was authored by and is property of Technical420.All information and data relied upon in drafting this report is publicly available.The author believes and considers its ...
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