Should Investors Pick Up This Pot Stock on the Cheap?
A Pot Stock Most People Likely Haven’t Considered
There is no other way to put it: pot stocks are in a bear market. If an investor loaded up on marijuana companies in the last few months, chances are they are deep in the red.
The blunt reality is, market participants are trying to de-risk their portfolios. Since pot stocks have been some of the most volatile tickers, they get sold off first. In the last three months, the North American Marijuana Index plunged from $273.62 to $178.79, marking a staggering drop of over 34%. (Source: “Marijuana Index,” The Marijuana Index, last accessed August 28, 2019.)
One of the beaten-down names in the marijuana industry is iAnthus Capital Holdings Inc (OTCMKTS:ITHUF, CNSX:IAN), a vertically integrated multi-state operator with headquarters in New York City.
Like many smaller pot companies, iAnthus stock is listed on the Canadian Securities Exchange. However, it is also possible for U.S. investors to get a piece of the action because they can purchase iAnthus shares over the counter under the symbol “ITHUF.”
iAnthus Capital Holdings Inc (OTCMKTS:ITHUF) Stock Chart
As I said, iAnthus stock is an out-of-favor name at the moment. Looking at its price chart, we see that, over the past 12 months, ITHUF stock has plunged by more than 50%. Ouch!
Chart courtesy of StockCharts.com
iAnthus Capital Holdings Inc Outlook
The thing is, while iAnthus stock has had a disappointing share price performance, there’s nothing disappointing about the company’s business.
In the second quarter of 2019, iAnthus Capital Holdings Inc generated $25.0 million of revenue, marking a 35% sequential increase. (Source: “iAnthus Reports Fiscal Second Quarter 2019 Financial Results,” iAnthus Capital Holdings Inc, August 26, 2019.)
Also during the quarter, the company opened five new dispensaries in Florida, bringing its total number of dispensaries in the Sunshine State to eight.
Across the U.S., iAnthus Capital now has 23 open dispensaries and holds 68 dispensary licenses. (Source: “Transforming Cannabis,” iAnthus Capital Holdings Inc, last accessed August 28, 2019.)
The company’s other big achievement in the second quarter was the completion of its previously-announced acquisition of CBD For Life, a leading national cannabidiol (CBD) brand in the United States.
The deal gave a huge boost to iAnthus Capital’s presence in the booming CBD industry because CBD For Life’s products are already sold in more than 1,100 retail locations in 46 states.
Mind you, this is not the first time iAnthus Capital has used an acquisition strategy to grow its business. Earlier this year, the company bought MPX Bioceutical Corporation, a producer of medical marijuana and pharmaceutical-grade cannabis products.
iAnthus Capital also has plans to further expand its retail presence. According to its latest investor presentation, the company expects to open flagship retail locations in Atlantic City, Brooklyn, and Miami in the second half of this year. (Source: “Transforming Cannabis,” iAnthus Capital Holdings Inc, op. cit.)
Analyst Take
Add it all up and you’ll see that the growth theme remains intact at iAnthus Capital Holdings Inc.
For investors who understand the underlying risks associated with the cannabis industry, the downturn in ITHUF stock could be an opportunity to pick up some shares on the cheap.
