This cannabis stock has a market cap of just over $300 million, but it pays out more than 100% in dividends. This company is the future; this could be your ticket to wealth.
The “cbd stocks to watch” is a marijuana stock that has been on the rise. The company’s low-priced shares have made it one of the most popular cannabis stocks in recent years.
Sundial’s stock might be on the verge of a big comeback.
For a variety of reasons, risk-tolerant investors appreciate low-priced shares (generally defined as companies with share values under $5). One of the most significant reasons is that modest amounts of money may be used to purchase a big number of shares. This technique, similar to purchasing a call or a put option, provides immediate leverage for shareholders (possibly multiplying gains) without having to worry about the all-important issue of an expiry date. Companies with very low share prices, on the other hand, are often plagued by underlying fundamental issues or operate in a high-risk sector (e.g., clinical-stage biotechs). As a result, these securities are inherently hazardous, making them only suitable for the most daring investors.
Despite the fact that legalized cannabis is now one of the world’s fastest-growing sectors, most publicly listed marijuana companies have seldom been nice to their early investors. As a consequence, many marijuana companies now trade for less than $5 per share. The slow pace of legalization in key commercial territories like the United States, overly aggressive management teams who have squandered vast sums of money on unnecessary facilities, and a thriving black market that typically offers consumers illicit products at far lower prices have all harmed this segment of the healthcare industry. However, one Canadian cannabis firm may have what it takes to overcome all of these obstacles and offer staggering profits to its stockholders in the years ahead.
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Sundial Growers: A high-value cannabis company with a hidden treasure.
Sundial Growers’ (NASDAQ:SNDL) stock has been one of the worst-performing in the whole cannabis market since its first public offering almost two years ago. In fact, the company’s stock has dropped by a staggering 92.2 percent in such a short period of time. Sundial’s dreadful performance since being a public corporation stems mostly from its proclivity for diluting shareholders. On a fully diluted basis, the company’s outstanding share count has ballooned by a stunning 160 percent in only two years, according to the most recent count. Sundial has been able to raise a large amount of cash for value-creating business expansion operations while avoiding taking on large amounts of debt (a issue that has afflicted some of the company’s closest counterparts).
What does Sundial do to produce long-term shareholder value? Sundial has made a number of changes over the last year in an effort to create long-term positive net income. To achieve this key operational goal, the cannabis company’s braintrust has moved into the liquor business with the recent acquisition of Alcanna, Canada’s largest private liquor retailer; expanded its commercial footprint by acquiring other cannabis retailers like Inner Spirit Holdings; plowed a healthy amount of capital into the investment side of its business through companies like SunStream Bancorp; and held a large amount of unrestricted cash in reserve, presumably in an emergency. Sundial’s top line is expected to increase by 371 percent next year as a result of these disruptive company growth measures, according to Wall Street.
What are the potential dangers? To begin with, despite this significant increase in its top line, Sundial is still expected to be cash-flow negative next year. Second, the corporation may continue to dilute shareholders at an alarming rate in order to keep its cash reserves high enough to pursue commercial expansion opportunities. Third, Sundial’s stock is currently trading considerably below the $1 minimum listing threshold for the Nasdaq Stock Market. In order to raise its share price over the $1 barrier, the corporation may have to do a reverse split. These possible hazards should not be overlooked by prospective investors.
Is Sundial’s stock worth taking a chance on?
Right now, the cannabis sector is experiencing a lot of growing pains. So, in this high-growth market, there will most likely be just a few large winners at the end of the day. The good news is that Sundial’s company has become sufficiently varied to withstand most, if not all, of these headwinds. The company’s substantial financial reserves should also enable it to wait out the lengthy legalization process in the crucial American market. However, if management fails to deliver on its promise to attain profitability within a reasonable time period, this low-priced cannabis stock might continue to fall.
All things considered, Sundial’s stock should be on the verge of a significant recovery. The company has become considerably more stable as a result of management’s fascinating business growth actions over the previous year. Sundial is also one of the few Canadian cannabis firms with enough capital on hand to enter the US market quickly if the chance arises. Investors, on the other hand, should probably not invest into this growth narrative unless they have a long-term outlook. It might take up to a decade for this small-cap cannabis company to achieve genuinely remarkable gains.
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