Alcanna (CLIQ-T)

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)

It's now half-liquor, half-weed, but liquor hasn't seen much growth in Alberta, so one part of the business is sidways and the other is a question mark, probably upwards. There are too many if's with CLIQ, but he's been watching it for a
long time. 3.3% dividend

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.

The liquor and cannabis businesses are two distinct and different businesses. CLIQ-T are going through a very extensive renovation this year. They are doing the right long term thinks in the business but it will impact it short time. There is great long term upside.

Dominant 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.

ACB paid a premium to the market price, hoping that it will become a distributor. That has not happened yet. The market price has not risen to the price ACB paid. This company is a former income trust. Like all other income trusts, they neglected their CAPEX. Their starting to do maintenance on their stores now, making them look better. The new management team will spend a lot of money on this. It will be messy for several quarters. Longer term, after they clean up their stores and the Alberta economy picks up again, will be a good holding. The dividend is not high enough to make the stock exciting for investors while they wait, so he doesn’t own it, but if he did own it, he wouldn’t be in a rush to sell it. If they do start to distribute marijuana, the stock will pop.

Their core liquor business is in turnaround mode, run by new management who are doing all the right things. They are focusing on private labels. They have been renovating their stores, they plan to open up to 50 new stores this year in Alberta and BC, liquor retailing is a good steady business as it is, which is good for this point in the business cycle, and they expect to increase sales with cannabis next year. They received a strategic investment from Aurora Cannabis, which now owns 20% of the company and will buy another 5% for $15 per share even though the company trades under $10 today. The western provinces are talking about privately owned cannabis stores, so the opportunity for them to move into this business in a big way is realistic. (Analysts’ price target is 13.10$)