TILT Holdings Inc: Will This $0.44 Pot Stock Make a Comeback?


TLLTF Stock a Pot Stock to Think About

Beaten-down stocks are usually not the safest bets. But if the situation at an out-of-favor company turns out to be not as bad as what market participants had thought, the stock might be able to make a strong comeback.

With that in mind, let’s check out TILT Holdings Inc (CNSX:TILT, OTCMKTS:TLLTF). Most people have never heard of of the company, but it comes from one of the fastest-growing industries in the stock market: legal marijuana.

Headquartered in Boston, TILT Holdings is a vertically integrated technology and infrastructure cannabis company.

You don’t really hear about TILT Holdings stock when analysts talk about pot stocks because the company is quite a bit different from most companies in the legal marijuana industry. Rather than just growing cannabis plants, TILT Holdings Inc provides comprehensive operations and software solutions at each stage in the supply chain.

For instance, TILT Holdings’ wholly-owned subsidiary Jupiter Research, LLC focuses on the design, development, and manufacturing of vaporizing technologies for natural plant-derived oil. (Source: “TILT Holdings Announces Milestone of Supporting 2,000 Brands Across North America and Full Integration of Baker into Blackbird,” TILT Holdings Inc, September 5, 2019.)

Blackbird Logistics Corporation, another of TILT Holdings’ wholly-owned subsidiaries, offers operations and software solutions for cannabis wholesale and retail distribution.

Meanwhile, TILT Holdings also owns Baker Technologies Inc, which offers a customer relationship management platform that helps dispensaries expand their business.

TILT Holdings Inc is listed on the Canadian Securities Exchange under the ticker symbol “TILT.” But for U.S. investors who want to get a piece of the action, they can find it trading over the counter under the symbol “TLLTF.”

As I mentioned earlier, this is a beaten-down stock. Since the beginning of this year, TLLTF stock’s price went from $2.50 to $0.44 per share, marking a drop of more than 80%.

TILT Holdings Inc Stock Chart

Chart courtesy of StockCharts.com

The thing is, though, while TILT Holdings stock is out of favor with investors these days, the company still manages to grow its business.

As a matter of fact, the company has just reached a major milestone. On September 5, TILT Holdings announced that between its three subsidiaries, the company has reached the milestone of supporting 2,000 brands across North America. (Source: TILT Holdings Inc, September 5, 2019, op. cit.)

“Achieving this number is a testament to TILT’s commitment to providing value to cannabis retailers through technology, hardware and software solutions,” said TILT Holdings Inc’s Interim Chief Executive Officer Mark Scatterday. (Source: Ibid.)

In other words, despite having a plunging share price, the company has actually built a solid presence in the cannabis industry.

TILT Holdings Inc’s financials have been improving, too.

In the second quarter of 2019, TILT Holdings generated $39.0 million of revenue, marking a solid 13% increase from the first quarter. The year-over-year improvement was even bigger because, in the year-ago period, the company did not generate any revenue. (Source: “TILT Holdings Reports Second Quarter Revenue of US$39 Million, Positive Adjusted EBITDA for July,” TILT Holdings Inc, August 28, 2019.)

Meanwhile, the company narrowed its adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) loss from $7.9 million in the first quarter of 2019 to $4.0 million in the second quarter.

What’s even more exciting is the company’s progress after the second quarter.

In just the month of July, it’s estimated that TILT Holdings Inc generated $15.0 million of revenue. At the same time, it’s estimated that the company earned an adjusted EBITDA of $500,000 in July, marking its first-ever month of positive adjusted EBTIDA.

Analyst Take

Add it all up and you’ll see that TILT Holdings Inc’s business isn’t doing nearly as badly as what the TLLTF stock price performance seems to suggest.

In fact, as the cannabis industry enters the main stage, I wouldn’t be surprised to see more companies sign up to use one of the many services offered by TILT’s subsidiaries.

Bargain-hunting investors who want to get exposure to the booming marijuana industry should take a serious look at this low-priced pot stock.