Opinions Colin Stewart
AlcannaCLIQ.TOCOMMENTAug 17, 2016
Colin StewartStock 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
He still likes this. A very steady business. It has been penalized because they happen to have a lot of their corporate stores located in Alberta, so people have worried about declines in same-store sales. However, the business has been very resilient and very steady. The more interesting thing over the longer-term is whether they are going to be able to successfully execute on the expansion strategy in the US. They have started and have some stores in Kentucky, Connecticut and New Jersey. If successful, that could lead to a much more significant upside to the stock over time. Valuation is reasonable, and it generates quite a bit of free cash flow. Pays a decent dividend.