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2018 was a banner year for the legal cannabis industry and 2019 should be that much more significant.The cannabis sector recorded massive growth the past year; and this is a trend that is expected to continue for quite some time.
We have been closely following the cannabis industry and have been focused on targeting companies that are underappreciated and well positioned for growth. Today, we want to highlight ParcelPal Technology Inc. (PKG.CN) (PTNYF) which meets this criteria and is definitely worth watching.
ParcelPal provides on-demand local delivery services in North America. The company has strategic relationships with significant global conglomerates as well as leading Canadian cannabis retailers. ParcelPal has substantial growth prospects and trades at an attractive valuation.
In late November, ParcelPal released third-quarter financial results that showed impressive growth and we are favorable on the growth prospects going forward. During the quarter, the company generated more than $800,000 in revenue and is well positioned to see significant growth from here.
Focused on the Cannabis Market and Forms Relationship with Choom
In September, ParcelPal announced a strategic agreement with Choom Holdings, Inc. (CHOO.CN) (CHOOF), a leading cannabis retailer in Canada, for the distribution of cannabis. ParcelPal’s agreement with Choom will advance distribution to various retail outlets in Canada. The initiative will consist of:
- Distribution: ParcelPal and Choom will jointly develop the optimal roadmap for distribution within various provinces for adult use cannabis.
- Accessibility: Using Choom's and ParcelPal's platform to enhance user experience and accessibility to products offered.
- Compliance: ParcelPal and Choom will ensure that all products will be delivered will be within the parameters set forth by all regulating bodies in Canada.
- Safety: ParcelPal and Choom are dedicated to public safety by enabling safe access to product for consumers through an instant delivery channel with the goal to eliminate impaired driving.
We are favorable on this relationship and believe that each company adds strategic capabilities to the partnership. ParcelPal wants to be the Uber of cannabis for Canada and believe that Choom will enhance the company’s national cannabis distribution and delivery strategy. This represents a significant opportunity and will be a massive revenue driver for the companies, if successful.
Choom has a strategic relationship with Aurora Cannabis (ACB.TO) (ACBFF), whereby Aurora owns a significant portion of Choom and this could be a major catalyst for ParcelPal. The company has significant growth prospects as a result of its relationship with Choom and this is an opportunity that investors need to be watching.
In the Middle of a Major Expansion
During the last year, ParcelPal has been executing flawlessly on a multi-faceted growth strategy and has successfully delivered more than 1.5 million packages. This is significant for a company that is in the early stages of its growth cycle and for which we expect to see incremental growth over the next year.
One of the areas where ParcelPal has exceled is with strategic partnerships. The relationship with Amazon.com has been a major catalyst for growth and we are favorable on the focus on expansion. The company has a contract with Amazon.com for Vancouver, British Columbia and Everett, Washington and has expanded its footprint significantly.
In the most recent company update, CEO Kelly Abbot announced that the company has partnered with and invested in TokeIt (Centreel Systems) for the distribution of cannabis. We are favorable on the focus on the cannabis sector and the distribution side of the business represents a major opportunity.
ParcelPal ended 2018 on a high note and this leaves us excited for the year ahead. The company closed the year with a run rate of over 3.5 million. ParcelPal is continuously executing on its strategic plan, attracting potential partnerships, and looking at additional city expansions. This represents a significant opportunity for the company, and we are monitoring how the team executes from here.
A Company With Significant Growth Potential
With ParcelPal, there are countless opportunities for evolution and revenue diversification within the on-demand delivery industry. The company is well capitalized and has been reinvesting in its technology platform and has started to scale its service across Canada as well as the United States.
ParcelPal is in the middle of a major expansion and recently launched operations in Saskatoon and Calgary, two new markets on the west coast of Canada. The company plans to create a significant presence on the east coast of Canada as well and we will monitor how this process goes. ParcelPal intends to pursue a number of technologies, products and marketing initiatives to continue to drive further growth in 2019. The company's strategic priorities include:
- Grow monthly recurring revenues by engaging new and acquired customers.
- Continue to launch multiple delivery verticals within the application.
- Capitalize on various opportunities within the cannabis sector
- Further grow the technology platform and offer ParcelPal on multiple platforms
- Broaden ParcelPal’s geographic footprint across Canadian cities
- Continue leveraging its partnership with Amazon across North America
An Opportunity to Watch
When looking at cannabis companies, it is important to assess the management team and focus on companies that are led by a team that is oreiented towards growth and on creating value for shareholders. ParcelPal is led by a strong management team and the company recently enhanced the team through strategic additions.
ParcelPal is well capitalized and well positioned to execute on expansion focused initiatives and this is an important aspect of the story. Parcel Pal ended the year with more than $2 million in working capital which will allow for an 18 months expansionary run rate without the need to raise further capital. This is significant and we are favorable on the organic growth opportunities.
ParcelPal has a strategic relationship with Amazon.com and has been successful in expanding its footprint in North America. This is a company that we will be monitoring closely and if you want to learn more, please contact email@example.com.