Looking for a Low-Priced Pot Stock? Read This
Today’s chart highlights one of the most overlooked pot stocks on the market: Planet 13 Holdings Inc (OTCMKTS:PLNHF, CNSX:PLTH).
Unless you are a marijuana enthusiast who just visited Las Vegas, chances are Planet 13 doesn’t sound like a familiar name. The company currently has just one store, the Planet 13 Cannabis Entertainment Complex, which is located just steps away from the Las Vegas Strip.
The thing is, though, this is not just an average marijuana dispensary. The superstore has a whopping 16,200 square feet of space, making it the biggest cannabis store not just in the U.S., but the entire world.
The store was also named the best overall dispensary in Nevada by Leafly last year. (Source: “Part 7, Best in State: 2018’s Top Cannabis in Nevada,” Leafly, December 20, 2019.)
Planet 13 Customer Traffic
Planet 13 opened its giant complex on November 1, 2018. In its first month of operation, the facility welcomed on average 1,848 visitors per day.
And that number has been trending upward. According to the company’s latest report, the number of average visitors per day to the Planet 13 Cannabis Entertainment Complex increased to 3,405 in June 2019. (Source: “Planet 13 Announces Customer Traffic for June 2019,” Planet 13 Holdings Inc, July 9, 2019.)
Better yet, most of those visitors turned out to be buyers. In June, Planet 13’s facility had on average 2,011 paying customers per day. That translated to a visitor conversion rate of 59%.
The chart below shows the average daily customers at the Planet 13 Cannabis Entertainment Complex for each month since its opening.
Planet 13 Holdings Inc Delivers Growing Financials
The customers at Planet 13’s entertainment complex have been increasing their spending, which is good news for Planet 13 stock investors. From its opening month to June 2019, the average purchase went from $79.82 to $88.87, marking an increase of 11%. (Source: Ibid.)
When a retail store gets more customers—who also happen to spend more money—its revenue is bound to go up. And that’s basically what has been going on with Planet 13.
In the fourth quarter of 2018, Planet 13 Holdings Inc generated $8.3 million of revenue, representing a 145% increase from the $3.4 million generated in the fourth quarter of 2017. (Source: “Planet 13 Announces 2018 Financial Results and First 5 Months of Cannabis Entertainment Complex Performance,” Cision, April 30, 2019.)
And that growth has continued to this year. In the first quarter of 2019, Planet 13’s revenue grew by 286% year-over-year to $13.8 million. Gross profit before biological adjustments totaled $7.4 million, marking a staggering 354% increase from the $1.6 million generated in the year-ago period. (Source: “Planet 13 Announces First Quarter 2019 Financial Results,” Planet 13 Holdings Inc, May 30, 2019.)
At the same time, the company’s adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) totaled $1.3 million in the first quarter of 2019, which about doubled the $667,563 of adjusted EBITDA earned in the first quarter of 2018.
And these solid financial results aren’t the only reason why investors should check out PLNHF stock. Going forward, there is a major catalyst that could further boost the stock’s appeal.
You see, the massive 16,200-square-foot store was just Phase I of the company’s plan. Phase II of the project, which includes a coffee shop, pizzeria, event space, and experiential in-house production area, is currently under construction. (Source: “Corporate Presentation June 2019,” Planet 13 Holdings Inc, last accessed July 30, 2019.)
Once Phase II opens, the company will have access to additional sources of revenue, further improving its financial profile.
And while being a retailer may not be as exciting as, say, producing thousands of pounds of cannabis (which is what most of the well-known pot companies have been doing), Planet 13 Holdings has found its opportunity in the booming marijuana industry.
Because legal cannabis is a relatively new thing, consumers often look to retailers for direction on what products could suit them. As a result, retail shelf space—particularly at Planet 13’s iconic store—is highly sought after. There are multiple brands that pay a monthly fee to Planet 13 in order to have their products displayed on premium shelf space.
Planet 13 Holdings Inc (OTCMKTS:PLNHF) Stock Chart
Here’s a chart of Planet 13 stock’s performance so far this year:
Chart courtesy of StockCharts.com
Due to Planet 13 Holdings Inc’s solid financial performance, the stock market has taken a liking to the company. As you can see from the above chart, PLNHF stock has surged more than 70% year-to-date.
Still, with a market capitalization of less than $300.0 million and a share price of less than $2.00, Planet 13 stock remains undiscovered by a lot of mainstream investors.
Once more market participants realize the potential of this pot company, and once Phase II of its entertainment complex comes online, I wouldn’t be surprised to see PLNHF shares make another big move to the upside.