High Tide Inc: No. 1 Canadian Pot Retailer Trades at $0.50 Per Share

HITIF Stock Looks Interesting

High Tide Inc (CVE:HITI, OTCMKTS:HITIF) has got to be one of the most overlooked pot stocks in today’s market.

High Tide Stock trades at CA$0.60 per share in its home country Canada’s TSX Venture Exchange. In the U.S., HITI stock trades over the counter. The last time I checked, its U.S. stock price was just $0.50.

And yet, High Tide is a leading player in its operating market.

Allow me to explain.

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High Tide Inc started out in 2009 as one small smoke shop with just two employees. Through organic growth and strategic acquisitions, it’s now a prominent player in the Canadian cannabis retail industry with more than 700 employees. The company has business interests spanning North America and Europe.

According to its latest investor presentation, High Tide has 85 locations across Ontario, Alberta, Manitoba, and Saskatchewan. It has the largest recreational cannabis retail network in Canada in terms of revenue, and one of the largest by store count. (Source: “Investor Presentation: April 2021,” High Tide Inc, last accessed May 7, 2021.)

The company’s retail stores are under the “Canna Cabana,” “KushBar,” “Meta Cannabis Co.,” “Meta Cannabis Supply Co.,” and “NewLeaf Cannabis” banners, with additional locations under development across the country. High Tide plans to nearly double its current retail footprint by the end of 2021.

At the same time, the company has a wholesale segment that designs, manufactures, and distributes proprietary cannabis consumption accessories and lifestyle products. The segment offers an extensive product catalog of more than 5,000 stock-keeping units (SKUs). It also features 10 celebrity licenses.

Furthermore, High Tide Inc has boosted its presence with e-commerce platforms including “Grasscity.com,” “CBDcity.com,” and “SmokeCartel.com.”

Of course, Canada’s cannabis market is much smaller than the U.S. one. After all, the U.S. population is about nine times as high as Canada’s.

However, it’s worth keeping in mind that Canada was the first G7 country to legalize recreational marijuana nationwide.

And the Canadian market has been booming. According to Statistics Canada, legal retail pot sales in the country reached CA$2.6 billion in 2020, representing a 120% increase from 2019. (Source: “Retail Trade Sales by Province and Territory (x 1,000),” Statistics Canada, last accessed May 7, 2021.)

By being one of the major retailers in this market, High Tide has been churning out some serious growth figures.

In the first quarter of the company’s fiscal year 2021, which ended January 31, it generated CA$38.3 million of revenue, representing a whopping 179% increase year-over-year. (Source: “High Tide Reports First Quarter 2021 Financial Results Featuring a 179% Increase in Revenue and Record Adjusted EBITDA of $4.6 Million,” High Tide Inc, March 31, 2021.)

The company’s first-quarter gross profit totaled CA$14.8 million, which more than tripled the CA$4.8 million it earned in the year-ago period.

Meanwhile, High Tide generated record-high adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of CA$4.6 million in the first fiscal quarter. This also marked a huge improvement year-over-year, considering that, in the same quarter of the previous year, the company’s adjusted EBITDA was negative-CA$800,000.

With its expansion plans, High Tide Inc is focusing on the Ontario market (Ontario being the most populous province in Canada). The company said the following:

While pandemic restrictions caused a delay in construction in much of the province, the Company is encouraged by the Alcohol and Gaming Commission of Ontario’s decision on February 16, 2021 to increase the pace of Retail Store Authorizations it issues from 20 to 30 a week. The Company expects to reach 30 open stores in the province by September 30, 2021, the date on which the cap for any one retailer can own is set to increase from 30 to 75.

(Source: Ibid.)

High Tide Inc (OTCMKTS:HITIF) Stock Chart

Chart courtesy of StockCharts.com

Analyst Take

Looking at the above chart, we see that HITIF stock’s journey is similar to that of many other pot stocks. High Tide stock started building upward momentum toward the end of last year and skyrocketed in January and early February of this year. Since then, it has pared some of those gains.

High Tide Inc isn’t the most well-known company in the marijuana industry, but because of its sizable retail presence and impressive financials, it deserves the attention of pot stock investors.