Opinions

Allan Meyer Alcanna CLIQ-T DON'T BUY Apr 01, 2016

Very tied to the Alberta economy, so it is under a lot of pressure. Wouldn’t go in at this time. He also has some balance sheet concerns.

Allan Meyer

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$8.020

Stock price when the opinion was issued

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COMMENT

Pot retail and alcohol retail. Interesting as it has exposure to the marijuana space without the higher valuation. Even as he doesn't like the sector in general this is a good way to dip your toes in it.

DON'T BUY

The dividend isn't safe given company turmoil. They're converting Alberta liquor stores into cannabis retail, partnering with Aurora. This is a speculative play and a logistical challenge. It's difficult to run cannabis retail when you have no product to sell. The upside is that Aurora could just vertically integrate and own the entire channel.

PAST TOP PICK

(A Top Pick Apr 24/18, Down 47%) It's oversold. He's watching it and may buy back his position. They've gotten into cannabis retailing out west and are looking at Ontario where he expects them to have a strong presence. Note: Aurora bought 25% of CLIQ at $15/share (today $5). Ouch.

WEAK BUY

They've struggled with their liquor business, and are expanding into cannabis in BC and Ontario, and that takes capital. You must be patient here like a few years, but they should make a lot of money in cannabis in the future. Now is a good time to look at CLIQ.

TOP PICK

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)

WEAK BUY

He follows this closely. They're in liquor and now cannabis; they're growing same-stories and winning market share in Alberta for liquor. So when will we see a real improvement in margins? He expects them to deliver and for their cannabis division to perform well. CLIQ is well-positioned for cannabis. Profitability will come in a few years. Be patient. They will expand successfully.

RISKY

The dividend was very high, almost too high. The dividend was illuminated and the stock price took a hit. They are active in the alcohol space and marijuana. Have been raising money, and could be a potential acquisition for Aurora.

HOLD

Over time it will come back. They have a strong position in liquor retailing and have moved into Cannabis. They are clearly going to be a survivor. They are going to be able to consolidate.

DON'T BUY

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

DON'T BUY

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Allan Meyer Alcanna CLIQ-T DON'T BUY Apr 01, 2016

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