Inner Spirit Holdings stock made it on to Cannin’s Top 20 Hottest Stock list but why haven’t you heard of them? Inner Spirit Holdings operates and franchises retail dispensaries in Canada. They distribute their products under the Spiritleaf brand. The company was founded on March 2017 and is headquartered in Calgary, Canada. But why is Inner Spirit Holdings stock a strong buy?
Notably, Inner Spirit Holdings was the first Canadian retail cannabis company to be granted Canadian Franchise Association membership and has now established a network of 80-plus recreational cannabis stores from coast to coast under its Spiritleaf brand.
Backed by an experienced management team and partnered with local, national and international brands, ISH is seizing this once in a lifetime opportunity to be Canada’s leading cannabis retail store network. Seems like the company has a solid business model – but why is Inner Spirit Holdings stock a strong buy?
Related: 3 Best Hemp Stocks to Buy Now
Inner Spirit Holdings Fundamental Analysis
HQ: Calgary, Canada
Symbol: ISH (CN), INSHF (OTC)
Inner Spirit Holdings Focus: Strong
Inner Spirit Holdings is a retail store network in Canada’s recreational cannabis market. They brand under Spiritleaf and have applied a franchise model to create over 80 stores. Currently, they have access to 2.3 million customers. Recently, the big news for the company is an acquisition by Sundial (Nasdaq) for $131 million in May 2021.
Company Size: Neutral
Market Cap: US $86.9 million
Enterprise Value: $98.3 million
# of employees: 30
Majority Subsidiaries: Spirit Leaf Inc, Spiritleaf Corporate Inc, Spirit Leaf Macleod Inc.
Inner Spirit Operations: Strong
Cultivation: None. They only retail the finished products. Suppliers include Tilray (through High Park Holdings), HEXO, Auxly, UP, High Times and Loop/Pool.
Large. They have over 86 retail locations in BC, Alberta, Saskatchewan, Manitoba, Ontario, and Newfoundland and Labrador.
Vertically integrated: No
Horizontally diversified: Yes
Inner Spirit Financials: Neutral
Revenue (ttm): $31.47million
Outstanding shares (diluted): 285.2 million
Company Management: Neutral
CEO: Darren Bondar
VP Biz/Ethos: Cecil Horwitz
VP Finance: Jeremy Lee
Company Branding: Strong
Some of the products sold at their retail locations are branded under its Spiritleaf brand including Prairie Flower, Ruby, Stone Selects, and Spirit Joints.
Current share price: US $0.3025
52 week high/low: $0.07-0.345
Price to Sales: 2.83
Company Financing: Neutral
After Q1 2021 they reported $13 million CAD in cash with $46 million CAD in assets and $33 million CAD in total liabilities. They have around $27 million in debt.
Risks of Investing in Inner Spirit Holdings: High
The risks of investing in any cannabis company are very high given the volatility of the industry and the aggressive Canadian competition. However, the risk of investing in INSHF are somewhat lower given their foldup into Sundial which is traded on the Nasdaq.
Bottom Line: Why is Inner Spirit Holdings Stock a Strong Buy?
Inner Spirit Holdings ran a successful retail and franchise model building up number of locations in Canada to over 85 with plans to increase to over 100 by the end of 2021. Their overall sales were over $100 million CAD for 2020.
This cannabis stock may not already be on your radar but they should be now. In fact, their large retail presence attracted Sundial (Nasdaq: SNDL) to acquire them last month for a deal worth over $131 million. Consequently, this has driven stock prices to increase almost 300% from the end of 2020 and has placed them on Cannin’s hottest 20 stocks for the last few days running.
Their financials are pretty healthy although they are not profitable just yet. Notably, they have revenue of $26.8 million CAD with total net losses at $3.1 million CAD. Indeed, the next few stores to open should push them into profitability. They have low price to sales ratios (2.83) and low EV/Revenue (3.12) with plenty of upside still in their stock price even after the recent increase.
This is all likely what attracted Sundial to them. Subsequently, each Inner Spirit common share will become $0.30 cash and 0.0835 Sundial common shares. The overall purchase price is $0.39 per Inner Spirit common shares (over 50% premium).
For these reasons, Cannin.com believes Inner Spirit Holdings is a Strong Buy rating for 2021. Watch for their revenue to contribute to Sundial’s growth for the rest of 2021 and 2022.
Why is Inner Spirit Holdings Stock a Strong Buy?
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