Should You Buy Experion Stock?

Primary: Canada (7 provinces)
Secondary: USA
Majority Subsidiaries: EFX Laboratories Inc.

Operations: Strong

Cultivation: 2,500 kgs per year of cultivation with capacity to process 4,000 kgs per year of flower and pre-rolls. They have over 75 strains in their genetic bank.

Distribution:
They serve 7 provinces with access to over 600 retail locations throughout Canada. They have an increasing number of SKUs with very strong pre-roll sales.

Integration/Diversification:
Vertically integrated: Yes
Horizontally diversified: No

Related: 4th of July weekend expected to bring in $206,000,000 in national retail cannabis sales

Financials: Neutral

Revenue (ttm): $8.87 million
Outstanding shares (diluted): 100.76 million

WATCH: Experion Technical Analysis 

Management: Strong

CEO: Jarrett Malnarick
CFO: Kerry Biggs
VP Sales/Marketing: Daryn Medwid
VP Facilities/IT: Leo Wong

CEO Malnarick comes from the food and beverage, natural health, pharma, and agriculture industries. He also has cannabis experience from Washington and Oregon. Mr. Biggs comes from lululemon athletica.

Related: Cannin’s Best Cannabis Stocks 2021 – Reliq Health

Branding: Strong

Citizen Stash is their premium retail brand. Kanabe Goods is their medical brand. Both are carried as craft brands. They will release cannabis 2.0 products in 2021 (edibles, topicals etc).

Valuation: Neutral

Current share price: US $0.300
52 week high/low: $0.075-0.495
Price to Sales: 3.29
EV/Revenue: 3.02
Price/book: 2.82

Financing: Neutral

As of Feb. 28th, 2021 they had cash and cash equivalents of $1.28 million CAD, $13.29 million CAD in total assets with $1.58 million CAD of liabilities. They have $3 million CAD in long term debt.

Risks: Medium

The risks of investing in any cannabis company are very high given the immaturity of the market and all the Canadian competitors. The risk of investing in Experion are somewhat lessened by their growing QoQ sales growth and strong brands.

Related: Why is Inner Spirit Holdings Stock a Strong Buy?

Bottom Line: Should You Buy Experion Stock?

Experion Holdings is a vertically integrated cultivator of craft cannabis under the Citizen Stash and Kanabe brands. They have products distributed in 7 provinces in the very competitive Canadian market.

They are one of the smaller players in Canada but there is plenty to like about them. They’ve had six consecutive quarters of sales growth, most recently with $4.06 million CAD in the quarter ending in Feb. 28, 2021 (53% increase QoQ and 405% increase over the same quarter in 2020).  Interestingly they achieve $8 CAD per gram, which is above the average in Canada.

They are also on the cusp of profitability, something not many of their competitors can claim. Their first positive adjusted EBITDA happened in early 2021 and net losses were only around $90,000 CAD. If they can continue to grow sales and exhibit financial health, they may be ripe for M&A activity.

Their P/S, P/B, and EV/Revenue are all very competitive and the company is alright on cash flow. Experion stock is likely undervalued now. They announced they are changing their name to Citizen Stash Cannabis Corp to attempt to capitalize on their leading brand. This likely will be received positively by the market as Experion isn’t exactly a memorable name.

For all these reasons, we give them a Strong rating for 2021. Look for the stock price to increase and for them to continue becoming more profitable prior to larger companies noticing and attempting to pick them up.