Las Vegas is one of the most exciting cannabis markets in the United States and is an opportunity that we have been favorable on. This market attracts more than 44 million tourists on an annual basis and represents one of the most significant growth opportunities for cannabis businesses.
1933 Industries Inc. (TGIF.CN) (TGIFF) was an early mover when it comes to the Las Vegas cannabis market and this is an opportunity that we have been watching. During the last year, the company has significantly advanced its fundamental story and we have been impressed with its ability to execute.
Last week, 1933 Industries released second quarter financial results and these numbers showed strong growth on a comparative basis. Although these results were impressive, the response from the market was negative and we were surprised by this response. One of the reasons why we are favorable on this opportunity is due to the improving fundamentals and believe that this is an important trend to be following.
Acquires the Remaining Ownership Interests in Infused MFG
Earlier this month, 1933 Industries reported to have acquired the remaining ownership interests of its subsidiary, Infused MFG. and we believe that this was a strategic decision. When looking at the overall business, we are very excited about Infused and believe that it has significant growth prospects.
During the second quarter, Infused generated approx. $2.4 million in revenue and we are favorable on the margins associated with these sales. Going forward, we expect to see Infused record strong revenue growth and are favorable on its leverage to the burgeoning cannabidiol (CBD) opportunity.
One of the reasons why we are favorable on the CBD opportunity is due to the passing of the 2018 Farm Bill in late December. The legislation makes hemp farmers eligible for federally subsidized crop insurance and effectively removes CBD derived from hemp from the DEA’s list of controlled substances.
The passing of this legislation was a massive development for companies like Infused and we will monitor how this subsidiary continues to execute. Demand for products that contain CBD has been steadily increasing and this is an opportunity that we find to be exciting. Infused has already been a beneficiary of this trend and we expect to see the company penetrate new markets in 2019.
Earlier this year, 1933 reported that Infused had attained product distribution into 46 states and had established its own distribution to over 600 stores. Infused’s recognized brands are available in over 250 retail stores in California, Nevada, Arizona, and Colorado, with the remainder distributed across the United States.
This level of distribution is significant, and we expect to see overall fundamentals improve throughout the year. We consider the CBD opportunity to be one of the most attractive verticals of the cannabis industry and this is a market that we have been closely following for several years. Infused has been laser focused on this burgeoning opportunity and we expect this subsidiary to be a major value driver for 1933 going forward.
A Company that is Flying Under the Radar
Although 1933 Industries has significantly advanced its fundamental story, the shares are trading at a significant discount to its peers and this is an opportunity has been flying under the radar. With a market cap of approx. $150 million, we believe that the market underappreciates this cannabis company.
1933 Industries is led by a management team with a proven track record of success and we are favorable on this opportunity due to the significant growth prospects associated with its current expansion, the attractive business structure, the number of catalysts for growth, and the valuation.
We were impressed with the quarterly financial results reported earlier this month and are favorable on the growth prospects going forward. When looking at the revenue numbers and the balance sheet, you can see that the company has an attractive valuation when compared to its peers and this is an opportunity to watch.
1933 Industries is focused on some of the most exciting verticals of the cannabis industry and is levered to some of the largest and the most significant markets in the United States. We believe that 1933 Industries is one of the most undervalued opportunities in the cannabis sector and we will continue to monitor this company.
To learn more about this United States cannabis company, please reach out to email@example.com.
Pursuant to an agreement between StoneBridge Partners LLC and 1933 Industries we have been hired for a period of 180 days beginning January 9 , 2019 and ending July 9, 2019 to publicly disseminate information about (TGIF) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month for a period of 6 months. We own zero shares of (TGIF), which we purchased in the open market. We plan to sell the “ZERO” shares of (TGIF) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (TGIF) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.