Sean8213 wrote: Its from the same guy that made me know MPX:
BLVD Centers Corporation (CXV in Canada – $CD 0.085 per share, CVHIF in the US – $US 0.05 per share)
This company isn’t focused on the SUPPLY of MJ (or its products) to the public market, they are focused on addiction treatment and rehabilitation, AND they are in California, which is HOT right now. I know that marijuana isn’t typically referred to as an addiction, but bear with me and hear me out on this thesis.
This stock is currently valued at only $CD 0.085 (with a market cap of $19.8 million), which should even make the ‘penny-flippers’ here happy (although you will see below that is NOT why I own shares in CXV). I think this stock may also be a very different way to play the California Rec MJ legalization angle, but you can decide on your own if you agree with that.
The company is BLVD Centers Corporation (CXV) – they are a leader in the detoxification and outpatient rehab market, so it is an entirely different angle on MJ legalization, as I said. I see it this way – alcohol is a legal product but if you drink (or ARE drunk) at work, this is seen as a problem and you will either be forced to get help or they will fire you (more than likely make you get help, at least these days). I see EXACTLY the same happening with MJ users if they show up stoned at work – they will have to get treatment in order to keep their jobs. The same will likely be done with anyone caught driving under the influence of MJ – they will have to go to rehab (in order to keep their driver’s license or to get it back, if it is suspended) – just my take on how things will work, using alcohol as a model.
What I could find out about CXV so far:
- They operate 7 clinics in California and Oregon, and they are expanding, having announced the opening of their latest clinic on October 31, 2017
- They offer both inpatient and outpatient services (you can see their rate of expansion – and their locations – in the attachment to this post)
- For Q2 their revenue was $CD 9.05 million, an increase of 22% for the same quarter of 2016 (looks to me that they have revenues of almost $1.3 million per quarter PER CLINIC)
- Their H1 revenue was $18.07 million, an increase of 23% YOY)
- At the current shares price of $0.085, they have a Market Cap of only $19.8 million (just over half as much as their projected revenue for THIS year (which is already half over for them)
- In Q2, they had POSITIVE EBITDA of 8.4% - now I am NOT an accountant but I DO know that positive EBITDA is a good thing, especially when compared to stocks in the MJ space
- Their Q2 net loss was only $76,000 so they are VERY close to being profitable (and they WERE slightly profitable LAST quarter), and their current re-vamped business model is relatively new
As you can see the attached stock chart, their share price peaked in June and has been on a slide since, even though their financials have been improving – they have good revenues, they are EBITDA positive, AND they are almost turning a net profit. The share price slide was likely exacerbated by (actual) tax-loss selling, as most of their shareholders who purchased shares during the year would be underwater at the current share price.
Also, as many of you who have read my past posts already know, I love the 50-day moving average line as a sign of a stock’s potential future upward move, and CXV has stopped its decline - and even moved up a bit - and is RIGHT AT their 50-day moving average line right now (see the attached graph), so that MAY indicate an upcoming rise in share price (but is not a guarantee of any rise, of course).
With current annual revenues of about $36 million and a market cap just under $20 million, they are trading at FAR less than even ONE times revenue, so I see good value there (but that is just me). I know that CXV isn’t an MJ-producing company, but compared to the valuations that MJ companies are getting right now, CXV’s Market Cap to Revenue ratio is VERY attractive.
I think the acceptance – and even encouragement – of people getting treatment to addictions is only going to increase the demand for CXV’s services so they will likely continue to open more clinics, now that they have perfected their operating model. A great service, growing revenues, near NET profitability – I can’t see anything not to love here, other than their recent stock performance, and perhaps that will turn around soon.