The transformation of the Canadian cannabis market with the legalization of 2.0 products is an opportunity that we are excited about over the long-term. Although the market has been less than impressed with the sales numbers that are coming out of Canada, we believe that the long-term opportunity remains intact.
Although we continue to have a constructive outlook on the legal cannabis market, the industry has been under considerable pressure and we believe that selectivity will be more important than ever. During the last year, we have seen a substantial increase in the number of public companies that are focused on the cannabis industry and have conducted due diligence on many of the new opportunities.
When analyzing the types of companies that are going public, we have noticed certain trends in the market. The primary trend that we have identified is an influx of companies that are levered to whichever vertical is generating traction at the time. In 2017, it was Canadian Licensed Producers (LPs). In 2018, it was multi-state-operators in the US and in international markets. In 2019, it was hemp and cannabidiol (CBD) companies. In 2020, it is brands and the cannabis 2.0 market in Canada.
Timing is everything and is one of the primary characteristics that we look for in a cannabis company. We are most interested in businesses that have been ahead of the curve and are led by a management team that is actually executing on previously announced initiatives (which is easier said than done).
During the last year, the cannabis sector has been under considerable pressure and this is a trend that our readers need to be aware of. Currently, we are focused on identifying companies that are recording strong revenue growth, are increasing market share, are entering new markets, and are positioning the business for continued growth.
MediPharm is an Underappreciated Global Growth Opportunity
MediPharm Labs (LABS.TO) (MEDIF) is a business that we are bullish on and is one that has been ahead of the curve with the cannabis oil opportunity. From Canada to Australia, the company has been ramping up revenues and scaling the business. MediPharm has significant catalysts for growth, and a favorable risk-reward profile.
Although MediPharm has been nothing short of an execution story, the business has faced significant headwinds and several broker-dealers have lowered their respective price targets on the stock. Going forward we believe that MediPharm is well positioned for growth and the stock is trading below the price targets that have been issued to it.
Currently, MediPharm is trading near the $2.50 level and the recent trend has been to the downside. PI Financial issued the company a $6.75 price target and Canaccord Genuity has issued it a $7.25 price target. This is implies that there is substantial upside to current levels and this is an opportunity that we are going to be closely following.
If you are interested in learning more about the Canadian cannabis oil company, please send an email to firstname.lastname@example.org to be added to our distribution list.