Delta 9 is the most undervalued weed stock by far! Hey guys I just put this together to post on Reddit...let me know what you think...cheers GLTA!
Delta 9 ($DN) Most undervalued weed stock by far
Delta 9 (TSX:DN)(OTCQX:VRNDF) has been flying under the radar for some time. They just had a record volume day and I think are primed for takeoff. Their market cap is ~60 million and they did over 50 million in revenue last year!!! Most other weedstocks are valued way higher than this! Just to give you an idea here are some of the names I’ve been seeing lately as comparables...
Aleafia Health.
Revenue last 4 Q’s ~ 35 million
Market cap - 382 million (11x their revs)
WMD
Revenue last 4 Q’s ~ 27 million
Market cap - 197 million (7x their revs)
TGOD
Revenue last 4 Q’s ~ 22 million
Market cap - 287 million (13x their revs)
Delta 9
Revenue last 4 Q’s ~ 52 million
Market cap - 60 million (1x their revs!)
As you can see they are valued at a massive discount compared to their peers. Some of the other numbers I have projected for their growth are even more convincing!
In Q3 for their retail business segment, they reported 8.6 million in revenue. This was for only 4 stores. They just opened their 10th store which means Q1 2021 could be around 20 million for retail sales alone! They have stated they plan to open 20 by the end of 2021 and they have followed through on all expansion plans so far so I have no reason to doubt it. That means Q1 2022 they could report 40 million or 160 million in annual retail revenue!!!!!
It doesn’t stop there because they have other business segments including Cultivation, Processing, and Wholesale and business to business (b2b) sales which is the sale of their grow pods to other cannabis companies . Both of these on average have added an extra ~ 3 million a quarter or 12 million a year. So that’s ~ 24 million a year combined assuming no growth. But as the US laws open up to allow more states to legalize, Delta 9 has announced plans to expand its B2B segment South of the border! So I expect there will at least be some growth here.
There is not much negative here. They have some debt as all growing cannabis companies do but are one of the few companies who has a line of credit at a reasonable rate with a major Canadian bank. I have seen people say the debentures are holding them back which could be a factor since Aleafia Health recently announced they intended to repay theirs in cash and the stock has run 140% since. However, this is not a concern in my mind as by my projections, Delta 9 will have ample cash to pay them off when they mature in 2022 and the cash is better used to expand their retail footprint. They had negative EBITDA last quarter but this was due to a one time write down, which we have seen other companies do as well unfortunately. The last two quarters before that they had positive EBITDA and I expect this upcoming quarter they will announce positive EBITDA as well.
Fully diluted they have about 130 million shares...insider ownership is approx 35% so there’s not a huge share float and high volume could really get this moving!
Forgot to mention their cost per gram is the best I’ve heard of in the industry (that’s counting all the major players) at $0.67! Even if it’s not the lowest that’s incredible for an indoor grow!
Right now I believe this is a $3 stock, which would only value them at 5x their current revenue, which is still conservative considering how much growth they will see over the next couple years.
Position: ~ 25,000 shares
TLDR: $DN is massively undervalued and should be 500% higher right now and 1000% higher in a year.