Globe article - Beacon Securities analyst Vahan Ajamian The stock you want to highlight is Hydropothecary Corp. You have a price target of $9.50, the highest on the Street. Why the bullish expectations?
If you look at the company’s average revenue per gram, last quarter it was around $9, higher than the Big 5 (Canopy, Aurora, MedReleaf, Aphria and CannTrust). Last quarter, cost per gram was much lower than the Big 5.
Last quarter, cost per gram was much lower than the Big 5. They have the ability to get unique products though the regulatory standard. For example, they are the only one to have a sublingual spray, and a second product they have is a powder which you can use to make your own capsules. They have these innovative products so they were able to get higher prices that helps you on the revenue side. They have lower costs because they only have greenhouses. They have structural cost advantages of being in Quebec. Quebec has the lowest power prices in the country. Quebec has a minimum wage of $12 per hour. The final thing that they have is what I would call a stranglehold on the Quebec market because they were the only ones licensed in Quebec up until five or six months ago.
If you are looking at a company that may be taken out, I think Hydropothecary is a real possibility. If somebody wants to get a foothold in the Quebec market, improve their own cost per gram and revenue per gram, and if they can buy Hydropothecary for a fraction of their market cap, I think if somebody’s looking for a takeout candidate, Hydropothecary has got to be one of the better ones out there.