Investment Analysis and Valuation of the Cannabis Industry
Your Comps Are Wrong: Why and How to Use Comp Tables
Why do we think comp tables are so important?
They are the key tool in understanding investment opportunities and risks in an industry.
And how can you manage a portfolio with wrong data?
- provide a menu of available public investment choices for purchase or sale
- show the range of valuations of the choices, showing discrepancies that may or may not converge in the future. Public valuations also inform private company valuations and acquisition pricing
- show the size and leverage of the public options
- show the range of operating margins and opportunities for margin expansion or compression
- show the cost of capital for companies and the industry, which can be applied to similar companies in the private market either raising new capital or deciding whether to sell to another company
- on the second page, the stock price performance shows what is moving up and down, helps isolate specific performance vs peers and the broader market
Publicly Available Commentary
Cannabis stocks are being driven by market dynamics and not fundamentals, creating opportunities for long term investors that can stomach the volatility. The rising correlations also present hedging opportunities: are you nervous about valuations after 4X gains in...
For the month of February cannabis stocks peaked then declined. The stocks ended up 17% for the US operators and 23% for the Canadian operators, and both groups have declined since peaking around February 8-10 (-13% for US and -26% for Canadian) - when we noted that...
If the past few months of cannabis policy wins were the spark to light investor interest in the industry, the involvement of Reddit-based speculation in the past weeks was the gasoline to this fire. But when the gasoline runs out, the fire must burn from an enduring...
There is an old saying that "bulls make money, bears make money, and pigs get slaughtered". If you're fat on meme stocks, congratulations, you better get out now before you're bacon. Tilray has increased 148% since last Friday, giving the pro forma Tilray-Aphria...
How do US cannabis operator valuations look when compared to other industries?
Cannabis stocks rallied in January on legislative optimism, then paused following capital issuance, and perhaps an unrelated short squeeze. Will systemic risk or tough comps continue to pressure them? For the month of January, cannabis stocks...
Why comp tables are key investment tools and why most tables for cannabis are wrong
Canadian cannabis operators outperform US operators despite no fundamental benefit from US legal changes
We review the returns and valuations for 2020 our cannabis comp table priced as of December 31, 2020
Our cannabis comp table priced as of December 18, 2020 can be downloaded below Last week was especially busy for the cannabis industry, and the comp table has been updated to include two new deals. In Canada, Tilray and Aphria announced to merge (well, Aphria...
Our cannabis comp table priced as of December 11, 2020 can be downloaded below Since the last public comp table on December 7, we have added Weedmaps / Silver Spike Acquisition Corp, taking the company guidance for the forward estimates from the presentation at the...
The discount in US-focused cannabis stocks vs Canada-focused stocks is starting to reverse, at least on EV/S, following stronger than expected results in the US, while Canada remains beset by price pressure against the illicit market. Investors must not paint all...
Comp Tables Premium Members
This content is for subscribers only.
On the Comp Table page, we provide:
- Fully diluted, in-the-money share counts
- Downloadable capital structure and sell-side estimate data
- Implied valuations
- Stock returns over various periods
A public sample with Premium Only details hidden can be downloaded below