Opinions
Jeff Young
Alcanna
CLIQ-T
DON'T BUY
Dec 13, 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
They sell liquor in Alberta and BC as well as in one of the states, possibly Kentucky. Facing some competition in BC, which he thinks is a political issue, as well as in Kentucky. Having to reinvest more in their stores to make it more appealing. New CEO is probably figuring out how he is going to right the ship and we should know in early 2014. Won’t be raising the 7.7% dividend and there could even be a cut.