Demand for cannabis oils, especially high cannabidiol (CBD) oil, continues to increase and this is a trend we expect to continue as researchers learn more about the therapeutic value cannabinoids provide.
During the last year, the number of countries that have legalized has significantly increased and this has been helping drive demand for CBD products. We have been closely monitoring this trend and have been identifying companies that are poised to benefit from the increased demand.
When looking at companies that are levered to the CBD opportunity, it is important to conduct significant due diligence on the company. Investors should be focused on companies that have an attractive portfolio of high-quality CBD products, that are levered to emerging CBD markets all over the world, and that are led by a management team with a proven track record of success.
One company that meets this criteria is Tree of Knowledge International Corp. (TOKI.CN) (TRKWF). The company is in middle of a major growth cycle and has focused on increasing market share in CBD markets all over the world. Through EVR Brands, a subsidiary of the company, Tree of Knowledge has been capitalizing on the CBD opportunity and we are favorable on the growth prospects heading into 2019.
Tree of Knowledge commenced trading on the CSE during the summer and has come off its recent highs. We think the market underappreciates this opportunity and are monitoring how the team continues to execute. We are favorable on Tree of Knowledge due to the attractive leverage to burgeoning CBD markets, the continued execution, the growth potential, the management team, and the valuation.
A Global Growth Story
One of the most important aspects of the company’s fundamental story is the leverage to burgeoning CBD markets all over the world. During the last year, EVR Brands significantly increased its reach and has been focused on building upon its existing position in CBD markets all over the world.
EVR Brands is focused on entering new markets and we are bullish on the company’s opportunity to do so. The company is in the early innings of a major growth cycle and has leverage to the CBD market in North and South America, Asia, and Europe. Over the next year, we expect to see the company enter new markets and view this a potential catalyst for Tree of Knowledge.
Tree of Knowledge has been focused on increasing market share all over the globe and benefits from having an early mover advantage. This is an important aspect of the story and EVR Brands has been able to capitalize on this advantage.
An Attractive Market Position
Although the CBD market in North America is in the early innings of a major growth cycle, the market is fragmented and EVR is focused on increasing market share. The company has partnered with several large distribution groups that have started to gain market share and drive revenues. Canada represents a major opportunity and offers EVR access to the world’s largest indoor grow, to a significant distribution network, and an R&D and teaching facility. We are going to monitor how this market develops over the next year and are favorable on EVR’s position in it.
South America represents a significant opportunity for EVR which has been gaining market share in Argentina and Brazil, two of the largest markets in South America. In these markets, CBD products are prescribed by doctors after being approved through the government. This is not an easy process but EVR has been successful in both countries. We are favorable on EVR’s position in these markets and will monitor how the company is able to increase its position going forward.
In Brazil, EVR is one of 11 approved suppliers to the doctors and is the most well-known and requested CBD product line. In Argentina, EVR is one of only two approved supplies. In 2018, the company expects to generate approx. $1 million in revenue from these two markets and we expect 2019 should be even more significant.
Although Asia represents a significant opportunity for CBD companies, the market is still in its infancy. China represents a major opportunity for EVR and the company expects to generate $1.5 million in revenue in China this year. EVR has a strategic relationship with a major distributor and expects to start distributing 50,000 units a month by the end of the third quarter. We are favorable on the growth potential and will monitor how this region adds value going forward.
EVR entered the European market through Ireland and the company plans to expand over the next year. EVR plans to increase market share in Europe through its operations in Ireland and we are monitoring this opportunity. In 2018, EVR expects to generate $1 million in revenue in Ireland and if the company can expand into new European markets, this part of the business can prove to be very significant.
A Company to Watch
Although Tree of Knowledge has significantly advanced its fundamental story, the shares have been under considerable pressure and have been trading lower with the market. The company’s leverage to the CBD market is significant and we are bullish on the growth prospects heading into 2019.
2018 has been a banner year for Tree of Knowledge and we expect 2019 to be even more significant. Demand for CBD products continues to increase, and we expect this trend to continue for the foreseeable future.
Tree of Knowledge is well positioned for growth and this is a company worth watching. To stay up to date with the company, please email email@example.com