Is Planet 13 Holdings Still a Strong Buy?
Cannabis stocks have been in demand since the legalization of cannabis across different states in the USA and the congressional passage of a bill that would decriminalize cannabis at the federal level. Nevada-based cannabis player Planet 13 Holdings Inc. (OTC: PLNHF) has started gaining popularity in the market these days. Substantial growth of about 300% in the past 12 months is certainly a reason to buy this cannabis stock but is Planet 13 Holdings still a strong buy?
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Planet 13’s Strong Financials
Planet 13 Holdings reported extremely strong numbers in its last quarter results. This Q3, it recorded its highest quarterly sales of $22.8 million. Despite being hit by the pandemic and operating only with 50% capacity in its Las Vegas Store, it managed an additional 36% revenue compared to previous quarters.
This superstore in Nevada is said to serve as many as 1,625 customers per day this quarter. The company could generate a net profit of $0.2 million this quarter against a loss of $1.7 million in Q3 of 2019. Adjusted EBITDA also rose from $3.4 million in the prior-year period to $6.2 million in Q3 of 2020. If we compare numbers with December 2019, the asset base in this quarter almost doubled from $62.9 million to $125.5 million.
Planet 13 management has attributed these increases to their improved business model and operations which they bought to serve their local customers better. They are determined to further improve their position post-pandemic. The cash balance of $56.8 million is sufficient to fund its future expansions. Analysts assume by the end of 2021 revenue could reach $141.9 million.
Building Growth Momentum
Planet 13 Holdings follows the strategy of vertically integrating the market. It had made several acquisitions this quarter. One of the key acquisitions which supported its massive sales growth is the 45,000 square feet of Indoor Cultivation on the 17th of July.
This November it officially took control over that space. There is a tremendous expansion plan in the works with the Nevada superstore and New Santa Ana Superstore. In October, the cannabis company declared it would double the sales floor and dispensary to 23,000 sq feet in its Nevada Store to lower the waiting time of customers.
An additional store in Santa Ana could give a new direction to the company since California; the second-most populous state of the US has been a cannabis hub where medical cannabis and recreational cannabis were legalized back in 1996 and 2016 respectively.
Also, this ongoing wave of legalization of both medical and recreational marijuana is going to create further expansion opportunities for cannabis companies in this industry. In the coming five years, the company is planning to open 7 new locations in the first-tier cities.
Planet 13’s Award Winners
Surviving in the volatile cannabis industry is very complicated and requires agility. Due to the constant dedication of the board and employees, Planet 13 was could win the additional Nevada License this August 10th. This recent award led to the opening of the highly successful Nedava Superstore that had closed previously in October 2018.
Also, Planet 13 won three cups this year at the Las Vegas Jack Herer Cup. The categories under which these cups were won include best Sativa vape cartridge, best hybrid vape cartridge, and best Sativa concentrate. While superfluous to most stock investors, these recognitions do build trust amongst customers while helping to build a stronger brand.
The recent strong financials, growth prospects, and brand recognitions have allowed Planet 13 to stand out and give tough competition to the cannabis players in the industry. Therefore, the current shareholders should hold their shares and witness the exciting near-future expansion. And if you are looking for a strong cannabis stock investment opportunity, this looks reasonable considering its aggressive five-year plan and strong current performance.
Is Planet 13 Holdings Still a Strong Buy?
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