Opinions
Michael Sprung
Alcanna
CLIQ-T
COMMENT
Dec 11, 2013
Stock price when the opinion was issued
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It was an income trust, and so they distrbitued too much money and didn't keep enough cash to refurbish their stores and stay competitive. That hurt, then they the oil price fell (they're based in Alberta), then they made some dumb acquisitions. Aurora Cannabis and the Bitove family have since invested. They've cut prices to wipe out competition, then bought that competition--twice. This has worked. Eventually, they will raise prices now that they've wiped out those competitors. Alberta law limits other liquor stores within a certain radius from existing shops, so they have a moat. And they're getting into cannabis. This stock is starting to move. (Analysts’ price target is $8.05)
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. No longer backed by Aurora. Multiple attempts to redesign stores. Multiple products sold at steep discounts. Deteriorating margins. Unlock Premium - Try 5i Free
Same-store sales, particularly in the US and to some extent in Canada, have been negative. Offset a little by some new bigger box wine stores they have been trying to open. However, this cannibalizes some of their other stores. Pays a very generous dividend of 7.68%. Unless things change around for them, he is not sure how long that dividend will be sustained.