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When it comes to looking at cannabis stocks, investors want to target companies that offer a differentiated opportunity, are well capitalized, and continue to execute. The name of the game is execution and investors want to focus on companies that are led by a management team that is laser focused on this goal.
The recreational marijuana opportunity in Canada is massive and companies are going to be fighting for market share. Over the last year, we have focused on Canadian licensed producers as well as brands positioned to capitalize on the recreational market and believe that this approach will prove to be successful.
Choom Holdings (CHOO:CNX) (CHOOF) is positioned to capitalize on the recreational opportunity by delivering an elevated customer experience through curated retail environments, a premium cannabis supply, and a diversity of brands.
We are favorable on the company’s structure as it is comprised of four distinct divisions which can create value for each other. Its divisions are focused on real estate, ACMPR applicants, retail dispensary operations, and a portfolio of ancillary brands. There are significant synergies that can be found between these divisions as the company continues to execute and we are bullish on this structure.
An Execution Story
Choom has been laser focused on securing strategic partners, and supply agreements so as to develop and acquire strategic licenses and production assets to meet the anticipated demand from the recreational market. The company currently owns two ACMPR applicants and is in the process of acquiring two more applicants.
Choom is focused on increasing production capacity and being a first mover in Canada’s recreational marijuana market as it offers an opportunity to build premium brands from the start. So far, Choom has applications pending in three Canadian provinces to open as many as 51 retail outlets.
Choom is looking to become a vertically integrated opportunity and is planning to open branded dispensaries across Canada. The company will utilize a multi-faceted growth strategy when it comes to this initiative. Choom plans to operate corporate stores as well as stores with independent operators across the country.
If Choom is granted a license open cannabis retail stores, this will be a significant catalyst for the company. Choom is well positioned to receive cannabis retail licenses for the recreational market and we view this as a major opportunity.
An Attractively Valued and Well-Run Opportunity
Choom possess an attractive operating structure that will provide the company with several event driven catalysts. We view the licensing opportunity and the retail opportunity as two major growth initiatives for Choom and are bullish on the continued execution.
The company is led by a management team that has a proven track record of success. Choom CEO Chris Bogart has over 20 years of experience and has been able successfully grow companies from market caps of less than $10 million to more than $400 million.
Choom is attractively valued and we are favorable on this aspect of the story. If you look at some comparable companies, you can see that Choom is significantly undervalued and this creates an exciting opportunity for long-term investors.