Planet 13 Holdings Poised for Massive Gains
Planet 13 Holdings Inc (OTCMKTS:PLNHF, CNSX:PLTH) continues to be one of the best U.S. pot stocks out there. While PLNHF stock has rallied 315% since the broader market bottomed in March, Planet 13 stock could still double or even quadruple from its current level over the next 12 months.
Why the optimism? Despite a sharp COVID-19-related drop-off in foot traffic in the latter half of March, Planet 13 continues to grow its market share in Nevada. In fact, the company reported strong first-quarter results.
Also in the first quarter, Planet 13 announced a strategic acquisition that gives it a sales license and 30-year sales lease for a dispensary in Santa Ana, California, and it launched a 24-hour delivery service.
Subsequent to the end of the first quarter, Planet 13 Holdings Inc purchased 45,000 square feet of indoor cultivation space in Nevada. The company also recently launched a line of cannabis-infused beverages. Furthermore, its own branded products continue to sell extremely well.
While the coronavirus pandemic continues to impact all businesses in Nevada, Planet 13 continues to see positive signs that activity is returning to normal.
PLNHF Stock Overview
Planet 13 owns and operates the world’s largest pot dispensary in Las Vegas. It also holds six licenses for the Nevada market. (Source: “Corporate Presentation, June 2020,” Planet 13 Holdings Inc, last accessed July 23, 2020.)
Conveniently located just off the Las Vegas Strip, Planet 13 Holdings’ dispensary covers 112,000 square feet. That equals roughly two football fields.
Here, pot aficionados can look for the company’s growing portfolio of branded products, including vapes, edibles, pre-rolls, and concentrates.
The company’s brands include “Trendi” (vapes and concentrates), “Medizin” (flower, vapes, and concentrates), “Dreamland” (chocolates), “HaHa” (infused gummies), “Leaf & Vine” (vapes), and “Planet M Premium CBD” (tinctures and topicals).
Planet 13’s Nevada dispensary also sells products by other companies, anything and everything related to cannabis.
And if customers need a break from all the shopping, they can grab a bite or drink in the coffee shop, bistro, or pizzeria.
To say that Planet 13 is popular in Las Vegas would be an understatement. In the first quarter, the company’s superstore accounted for 10.1% of all retail cannabis sales in Nevada. It was the company’s best quarter yet.
Its own branded products are also very popular. In the just-completed second quarter, Planet 13’s branded products accounted for 29% of all sales at its Las Vegas superstore, compared to 14% in the fourth quarter of 2019.
Planet 13 Holdings Inc is also busy expanding its operations outside of Nevada. In May, the company announced that a second marijuana superstore was being built in Santa Ana. Once completed, the operation will be the second-largest cannabis entertainment complex in the world. Because of COVID-19, however, Planet 13 is not putting a timeline on the opening of that dispensary.
Santa Ana is just the beginning. Over the next five years, the company wants to open at least eight additional superstores in tier-one markets across North America.
Chart courtesy of StockCharts.com
After plunging in early March, Planet 13 stock has been on a great trajectory, soaring 315%.
PLNHF stock tumbled quicker than most stocks in March. This was probably because investors thought consumer discretionary stocks would take a hit, with the pandemic forcing the economy to shut down.
It turns out it was the exact opposite for Planet 13 Holdings Inc. In eight of the 11 states where recreational marijuana is legal, dispensaries were declared “essential” businesses.
Since March, Planet 13 has also made a large number of announcements that have buoyed long-term investor sentiment.
On July 22, Planet 13 stock hit a new 52-week high of $2.65. After such strong gains, it wouldn’t be a big surprise to see the company’s share price take a breather with short-term profit-taking.
Q1 Revenue Up 21.4%, Net Income Before Taxes Triples
On June 1, Planet 13 announced that its revenue for the first quarter, ended March 31, had increased 21.4% year-over-year to $16.8 million. (Source: “Planet 13 Announces First Quarter 2020 Financial Results,” Planet 13 Holdings Inc, June 1, 2020.)
Gross profits before biological adjustments were $9.0 million, or 53.9%, a 21.5% increase over the gross profits in the first quarter of 2019.
Net income before taxes was $300,000, up 200% compared to the net income in the same prior-year period. PLNHF reported a first-quarter net loss of $1.4 million, which was on par with the prior-year period’s net loss.
The company reported adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of $2.5 million, a 47% increase over the EBITDA in the first quarter of 2019.
Planet 13 Holdings Inc ended the first quarter with cash of $13.9 million, total assets of $66.5 million, and total liabilities of $24.7 million.
Larry Scheffler, co-CEO of Planet 13, commented, “I am very proud of the solid Q1 Revenue and EBITDA delivered by our team, despite a sharp COVID-19 related drop-off in traffic in the latter half of March.”
He added, “While Q2 has been a challenging period for all Nevada businesses, Planet 13 pivoted quickly to a delivery-based model, which has significantly lessened the impact of lower tourist traffic, while broadening the SuperStore’s long-term customer base and opportunity set.” (Source: Ibid.)
Management went on to say that, as Nevada has started to reopen, allowing for both curbside pickup and limited in-store transactions, the company has seen a corresponding pickup in sales. The company’s delivery service is popular, with over 40% of customers choosing to have their products dropped off.
Some people just can’t live without cannabis, especially during troubled times. While many retail stocks have taken a beating during the COVID-19 pandemic, Planet 13 Holdings Inc has thrived.
PLNHF stock has soared more than 300% since March, and the company’s short- and long-term outlooks remain bullish.