Opinions Ryan Modesto
AlcannaCLIQ.TOSELLMar 03, 2016
Stock price when the opinion was issued
As of Apr 01, 2022. Market Open.
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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)
Fabrice Taylor
Ryan Modesto
He still likes it. They are a leading liquor retailer and will get into Cannabis. They will be getting into Ontario as well as where they are in Alberta. They generate free cash flow and earnings already. It is a stealth way to play the cannabis sector.
Colin StewartDominant position in Alberta liquor, which is competitive, so they're diversifying. Trying to acquire licenses in cannabis, which is an interesting opportunity. Liquor business in turnaround mode which will improve over next few years, but market isn't giving value to the cannabis division. Will have a strong position when the licenses come through.
Colin Stewart
Can’t believe they have not cut their dividend yet. At 12%, the market is trying to tell them that it is time to improve their financial flexibility, and at least decrease the dividend. This is really concentrated in Alberta, and when the stores are in areas where people are not there are any longer, revenues are going to start declining. Have always had a bit of a high payout ratio on dividends. They are trying to diverse into the US market, but eventually something has to give. Not a huge fan of this.