Interesting shadow play cannabis stock

Cannabis stocks are again very popular as progress in legalization is progressing globally quit fast. I have invested a large sum to IIPR , Innovative industrial properties, a cannabis REIT. But now I have found interesting stock related to the industry.

EnWave Corporation licenses, builds, and installs commercial-scale dehydration platforms for applications in the food, pharmaceutical, and industrial sectors to manufacturing companies in Canada. Their customers are now also to within cannabis industry.

Typical products to use technology are dried foods

Unlock New Product Opportunities with Innovative Dehydration Technology

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Cannabis is a growing industry which also needs drying technology in industrial scale.

Their earnings are also turning positive after long years of operating at loss.

image Interesting shadow play cannabis stock

Fastgraphs estimations:

image-1 Interesting shadow play cannabis stock

This is very interesting opportunity as stock might pick up nicely. Of course stock is very risky as market cap is under $200M and will fall hard if growth story does not hold.

Disclosure I own shares in Enwave

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Year of Cannabis- Riding it like a boss with IIPR

2019 will be year of cannabis. More and more countries are joining allow it like recently Japan. Investing in cannabis is hard but I have found safer option. Innovative Industrial Properties (IIPR) They operate facilities for top quality cannabis farms as landlords. They are expanding fast and producers like their approach. Their funds from operation is forecasted to grow 100% this year I estimate that it translate to at least 50% of stock return. It also pays already a dividend of 2.%. Inchimoku cloud 3/3 of positive sign and 9 count on 4 up means it should ok entry now even it has risen quite much already on technical levels. Here is free cash flow estimation: #investing #cannabis #stocks #dividendsCapture Year of Cannabis- Riding it like a boss with IIPR

A stock young Buffett would buy

smex3 A stock young Buffett would buy

Buffett invested in small unloved companies in early days. This next stock would qualify as one. Supremex is a Canadian packaging manufacturer. With internet buying being popular, company has been increasing sales of different packaging products. However their stock is quite unloved for a logic reason, they have been know for envelope manufacturing which is still a major business for them. Of course email has killed major part of traditional mail so the reason is logical.

https://www.supremex.com/

smex1 A stock young Buffett would buy

source https://www.supremex.com presentation

 

Main financials

 

Stock has very low P/E ratio of 6.4 and beefy 8% dividend yield.

Market cap is only 90 M, so this is tiny company among listed companies. The long term debt has been increasing during last couple years to 1.5 dollars per share when share price at time of writing is 3.3 dollars. For current ratio this means 2.13 which is high.

 

Story

The large amount of debt has been used to leverage the cardboard packaging assets and purchases. Their most recent purchases are Groupe Deux Printing Inc and Pharmaflex Labels Inc, which operate in pharmaceutical industry. This looks like a smart move when medicine will transform more to be delivered via mail. The company is an old player in the market with history starting from 70’s. The company is listed in Toronto stock exchange. Their change started from 2014 and has worked well for them, needless to say that packaging will take over the business in couple of years with these grow rates.

 

smex2 A stock young Buffett would buy

source https://www.supremex.com presentation

Recent quarterly report summary

The company grew revenue Y over Y by 13.8% and growth came entire from packaging products.(129% sector growth) Envelope business continue to decline in phase of 10%. EBITDA increased also 13.3% Y over Y. This an acceleration from 11% value measured of last six months.

 

Risks and conclusion

 

66% of the business still comes from envelopes and this is the largest risk in addition to debt. Or you could say there is no risk, this business will die. To keep share price positive, they need to be able to do the transformation away from envelopes. Analyst see that in couple years company EPS growth should pickup. Of course media keeps on telling that bear market is near and that would really hurt with high debt load company now has. But in the end the risk is acceptable to me. This is now a value company with under 7 P/E and 8% dividend yield which is transitioning to real growth stock in couple of years. I see so trouble for them to keep up an even continue to increase the dividend by 10% or more in next three years. +20% yearly return possibility with this cigar butt.

 

Disclosure: I own stock in Supremex, Long.

Keep on investing!

SP500 turnaround call

I predicted turnaround of SP500 spot on Tom Demark style indicator:

Here is link original FB post: link

Now I continued the analysis for moving forward on steemit platform.

Click here to ready my post on steemit and join it you like it. It is create site and return of which goes straight to the content creators:

https://steemit.com/technical/@investing101/sp500-market-analysis-that-is-traditional-market-for-those-of-you-in-crypto-with-td-indicator-random-number-tone-style

Keep on investing!