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Accumulate and hold!
Always do your own DD!
https://www.marijuanamoment.net/civil-rights-groups-demand-congress-pass-federal-marijuana-legalization-bill-this-month/
Accumulate and hold!
Always do your own DD!
Amazon with all its cash could buy TEXAS so it could a few Senators
Accumulate and hold!
Always do your own DD!
https://www.marketwatch.com/story/cannabis-stocks-rally-after-amazon-endorses-legalization-11622659887
Accumulate and hold!
Always do your own DD!
https://www.cnbc.com/2021/06/01/amazon-backs-federal-bill-to-legalize-marijuana-.html
Accumulate and hold!
Always do your own DD!
Accumulate and hold!
Just apply the Alaska Gold Rush mentality to the Pot Stock Rush. Selling Picks & Shovels was hugely profitable without getting hands dirty. The Pot Rush, no different.
Always do your own DD!
https://www.ganjapreneur.com/federal-cannabis-legalization-bill-proposed-in-u-s-house/
Accumulate and hold!
Always do your own DD!
https://mjbizdaily.com/key-us-house-lawmaker-reintroduces-federal-marijuana-legalization-bill/
Accumulate and hold!
Always do your own DD!
The TIDE is turning in a BIG way!
https://www.businesswire.com/news/home/20210525005273/en/Brand-New-Poll-Shows-Soaring-Bipartisan-Support-for-Federal-Cannabis-Legalization-Among-AZ-UT-WV-Voters
Accumulate and hold!
Always do your own DD!
https://www.marijuanamoment.net/federal-cannabis-legalization-bill-coming-this-week-newsletter-may-24-2021/
Accumulate and hold!
Always do your own DD!
https://www.marijuanamoment.net/key-chairman-plans-to-file-revised-federal-marijuana-legalization-bill-in-house-as-early-as-next-week/
Accumulate and hold!
Always do your own DD!
Somebody is selling, somebody is buying. Capital gain tax will rise. Taking gains now and having them tax now, and going long with the replacement.
Accumulate and hold!
Always do your own DD!
https://www.technical420.com/cannabis-article/surnas-growing-backlog-is-a-sign-of-a-serious-uptick-in-its-core-business/#
Accumulate and hold!
Always do your own DD!
https://mjbizdaily.com/two-us-house-republicans-pitch-federal-marijuana-legalization-bill/
Accumulate and hold!
Always do your own DD!
https://mjbizdaily.com/two-us-house-republicans-pitch-federal-marijuana-legalization-bill/
Accumulate and hold!
Always do your own DD!
RS, and going to Nasdaq would take care of it?
https://mjbizdaily.com/marijuana-industry-expected-to-add-92-billion-to-us-economy-in-2021/
Accumulate and hold!
Always do your own DD!
Hang in There and always do your own DD!
https://www.politico.com/news/2021/05/09/medical-marijuana-conservative-states-485830
Accumulate and hold!
Always do your own DD!
https://theweedblog.com/policy/schumer-says-federal-marijuana-bill-will-legalize-cannabis-right-way
Accumulate and hold!
Always do your own DD!
https://federalnewsnetwork.com/government-news/2021/05/alabama-house-drops-resistance-oks-medical-marijuana-bill/
Even Jeff Sessions Alabama goes for it!
Accumulate and hold!
Always do your own DD!
Surna: Don't Call It A Comeback
Apr. 30, 2021 2:35 PMSurna Inc. (SRNA)
Summary
Surna remains one of the few cannabis stocks that knows no geographical bounds and is poised to expand outside of marijuana cultivation.
Even after surging 21% since the start of April, Surna still trades around 1x 2021 revenue, a steep discount relative to industry peers.
I expect near-term catalysts to push the stock to new levels within the month of May, starting with Q1 earnings due by mid-May.
Photo by OpenRangeStock/iStock via Getty Images
Those who follow me or who follow Surna (OTCQB:SRNA) know that there aren't a lot of people following the company. And I get it - the small public issue commands a market capitalization around $21 million, just barely enough for Seeking Alpha to allow coverage. But for those comfortable with nano-cap risk and looking for a "pick and shovel" cannabis industry investment, Surna checks all the boxes. And even a few bonus boxes.
Has a history of real sales and financial performance? Check.
On a path to profitability? Check.
Trades at a steep discount to peers? Check.
Primed to expand outside of the cannabis industry? Check plus.
If you're just hearing about Surna now here's the nitty gritty. This Boulder, Colorado-based company specializes in hardware and design strategies used to create and maintain the highly-specific conditions required to grow marijuana, something the industry refers to as controlled environment agriculture, or CEA.
Translation: Marijuana is a finicky plant and requires specific light, temperature, humidity and other environmental controls. Surna makes the systems that help growers grow.
Because Surna doesn't actually touch marijuana it isn't limited to a certain state or country. Of course, one could grow marijuana without Surna's systems, however they would be unlikely to do so as profitably. Surna's customers have done the ROI analysis, are well-capitalized enough to make major investments in their grow operation build-out, and understand that in a commodity business like that of marijuana cultivation, the low cost producer wins.
And the cherry on top farther down the road... because Surna's systems help growers maintain specific environments that aren't achieved outdoors and in nature, Surna's systems have immediate transferability to urban agriculture and agriculture conducted in environments that would otherwise be too hot or too cold to yield a crop.
Let's review each of the near term catalysts.
Earnings
We expect Surna to release its Q1 earnings within the next two weeks. Given that we have already received a preview of Q1 and know that bookings have returned to and even surpassed pre-pandemic levels, I think it's safe to say this earnings report will be well received. What we know already is that Surna booked $5.5M in new business during the first quarter. We also know that Surna booked a non-cannabis contract worth more than $100,000, the first such contract we have ever learned of.
We know from previous filings that some of its biggest contracts are coming from repeat-customers. I'd certainly like to know whether that was the case with any of the new bookings when we see Q1 earnings, as well as our first look at revenue for the year.
The market absolutely loved when Surna announced its first profitable year (FY2019), when Surna announced its largest contract in history (Jan 2021) and more recently when the company announced preliminary Q1 bookings ahead of the full earnings release. I don't think the company would have pre-released all of their good news especially with the shareholder meeting approaching, so I expect to be pleasantly surprised by Q1 earnings.
Shareholder Meeting, Proxy and Roadmap
Surna's management team laid out a roadmap in the past and I'm excited to learn more about where this stands, how the company is faring through the pandemic, and what's next for the roadmap. Much of this was laid out in the February 2020 investor letter and November 2020 investor presentation. Notably, Surna appears to be executing on its plan to deepen its product offering to attract new customers as well as its plan to add new product offerings to increase average order size.
We have also seen that the biography Surna uses in press releases is changing and seems to almost dance around the words "cannabis" and "marijuana," a recent development. In fact, reading the company's biography in the most recent press release you'll see sentences like "our customers include commercial growers" and "we leverage our experience in this space to bring value-added climate control solutions to our customers." The point is, it looks like Surna is finally ready to start putting energy and dollars behind branching outside of cannabis cultivation, something shareholders have been asking about for years. I can't wait to hear more! How many companies in the cannabis industry can you think of that can serve customers outside of the industry?
Surna will hold a shareholder meeting on May 28. There are several important votes in the proxy materials - I encourage all shareholders to review the proxy statement closely. I'm not going to dive into each vote here (although I welcome the opportunity to do so in the comment section) but I have read through them in detail and want to offer my general sentiment.
I'd like to hear more of the "Why" before voting but I am generally supportive of the roadmap laid out by this management team in the past. If management thinks that the proxy statement it has presented is the best chance to uplist or clean up the share structure or utilize shares as currency for mergers/acquisitions to add value to shareholders, I'm inclined to agree. If these changes help Surna uplist to Nasdaq or another exchange, meet inclusion criteria for various ETFs and institutional investors, and become a more widely held issue then there's no question we would see the stock higher than it is today.
I'm excited to learn more about the roadmap and company outlook and think the read-out of the investor meeting could prove a significant catalyst for the stock.
X Factor (Legislation, Partnerships, M&A, etc)
There is always the "X factor" with catalysts, those that are mere speculation or are impossible to predict if and/or when they might come to fruition.
The first of these is the likelihood of federal legislation allowing the cannabis industry to access banking. While many of Surna's customers are well-capitalized enough to plunk down the large amount of capital it takes to properly build out a state-of-the-art grow facility, there is no doubt that some players in the industry are not as well capitalized. Especially as legislative bodies work to address historical inequalities as they create frameworks and systems around their legal cannabis industry, it is inevitable that the federal government will allow cannabis entrepreneurs to access the federal banking system. We know that incremental dollars spent on Surna's systems are recaptured via increased yields and favorable ROI. As such there is no doubt in my mind that if the federal government allows access to capital we will see a significant increase in the number of unique customers who are suddenly well-capitalized enough to buy from Surna. This moment could come soon, as the U.S. House of Representatives passed their "SAFE Banking Act" measure last week.
There is always the possibility of an acquisition of Surna, something I have quietly worried about for a while. Perhaps Carrier (CARR), Trane (TT), or Johnson Controls (JCI) wishes to enter the cannabis space and leapfrog into the dominant spot by pairing Surna's technology with their own HVAC behemoth. As a current Surna shareholder, I don't want to see this. Yes, an acquisition would cause the stock to spike and offer a quick gain. But even if the premium offered by an acquirer was 2x or 3x today's levels I think this would be far below the company's fair market value. Though not a likely near-term catalyst, buying one's way into this industry via acquisition of Surna makes sense for any number of companies and it could happen any day.
Surna has recently joined a group of companies called GroAdvisor which appears to be building a one stop shop for those wishing to get into marijuana cultivation. Is GroAdvisor some kind of pre-cursor to a merger between Surna and its peers? I'd like to learn more about the company's overall roadmap at the investor meeting.
Surna also just announced a partnership with RSX Enterprises whereby the latter will handle key sales and marketing work for Surna in the U.S., Canada, and Mexico. Notably, the target market here is "indoor cultivators of all types," seemingly a major hint that Surna will continue to branch beyond the cannabis industry and that this partnership is part of that effort.
Final Thoughts
I have followed Surna since 2014 and owned shares in the stock for nearly as long. I'm still here because every time I take a fresh look at the company I return to the investment thesis that the stock is unknown, undersubscribed, and generally misunderstood. This is a solid business providing a niche product that is desperately needed by its customers, which also happens to operate in one of the hottest sectors of the economy.
Surna's existing customers are, themselves, growing and Surna's potential customer-base grows every time voters head to the polls. Surna's market isn't just limited to one state or province - like most cannabis industry companies - or even limited to one country. Indeed, Surna is free to bring its high-efficiency technologies to non-cannabis agriculture and other applications and I expect it will do so in greater frequency beginning in 2021.
Of course no investment is without risk and you should certainly weigh whether a ~$20M company is right for your portfolio. For me, the potential return far outweighs the potential risk. I suspect Surna's liquidation value (inventory, book of customers, proprietary information/technology, etc) is right around where the stock trades today.
There is reason to believe that the stock is primed for upside surprise. Look no further than the price action of January 14th of this year, not-so-coincidentally the day Surna announced its largest contract in history. The stock surged more than 200% that day, opening at $0.0729 per share and closing at $0.1999. More recent (though less dramatic) moves following positive news suggest that strong Q1 earnings and a clear roadmap for the future could finally trigger the price adjustment I have been expecting for months and even years.
Here's the bottom line: Surna booked $7.9 million worth of new business in Q3 and Q4 of 2020 and $5.5 million in Q1 of 2021. With $13.3 million worth of new business booked in just the past three quarters and Surna's sales apparatus hitting its stride as the economy starts to look past the pandemic, I think it is entirely likely Surna will book more than $20 million worth of revenue in 2021. With the stock trading around a $20 market capitalization this means Surna trades at 1x forward sales. Consider that companies in the cannabis space regularly command a price/sales multiple of 3x to 10x.
Assuming a reasonable 5x multiple to Surna's likely 2021 sales, I think the stock should - today - trade around a $100M market capitalization, nearly 5x where the stock closed on Thursday.
Disclosure: I am/we are long SRNA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Always do your own DD!
Accumulate and hold!
Surna: Don't Call It A Comeback
Apr. 30, 2021 2:35 PMSurna Inc. (SRNA)
Summary
Surna remains one of the few cannabis stocks that knows no geographical bounds and is poised to expand outside of marijuana cultivation.
Even after surging 21% since the start of April, Surna still trades around 1x 2021 revenue, a steep discount relative to industry peers.
I expect near-term catalysts to push the stock to new levels within the month of May, starting with Q1 earnings due by mid-May.
Photo by OpenRangeStock/iStock via Getty Images
Those who follow me or who follow Surna (OTCQB:SRNA) know that there aren't a lot of people following the company. And I get it - the small public issue commands a market capitalization around $21 million, just barely enough for Seeking Alpha to allow coverage. But for those comfortable with nano-cap risk and looking for a "pick and shovel" cannabis industry investment, Surna checks all the boxes. And even a few bonus boxes.
Has a history of real sales and financial performance? Check.
On a path to profitability? Check.
Trades at a steep discount to peers? Check.
Primed to expand outside of the cannabis industry? Check plus.
If you're just hearing about Surna now here's the nitty gritty. This Boulder, Colorado-based company specializes in hardware and design strategies used to create and maintain the highly-specific conditions required to grow marijuana, something the industry refers to as controlled environment agriculture, or CEA.
Translation: Marijuana is a finicky plant and requires specific light, temperature, humidity and other environmental controls. Surna makes the systems that help growers grow.
Because Surna doesn't actually touch marijuana it isn't limited to a certain state or country. Of course, one could grow marijuana without Surna's systems, however they would be unlikely to do so as profitably. Surna's customers have done the ROI analysis, are well-capitalized enough to make major investments in their grow operation build-out, and understand that in a commodity business like that of marijuana cultivation, the low cost producer wins.
And the cherry on top farther down the road... because Surna's systems help growers maintain specific environments that aren't achieved outdoors and in nature, Surna's systems have immediate transferability to urban agriculture and agriculture conducted in environments that would otherwise be too hot or too cold to yield a crop.
Let's review each of the near term catalysts.
Earnings
We expect Surna to release its Q1 earnings within the next two weeks. Given that we have already received a preview of Q1 and know that bookings have returned to and even surpassed pre-pandemic levels, I think it's safe to say this earnings report will be well received. What we know already is that Surna booked $5.5M in new business during the first quarter. We also know that Surna booked a non-cannabis contract worth more than $100,000, the first such contract we have ever learned of.
We know from previous filings that some of its biggest contracts are coming from repeat-customers. I'd certainly like to know whether that was the case with any of the new bookings when we see Q1 earnings, as well as our first look at revenue for the year.
The market absolutely loved when Surna announced its first profitable year (FY2019), when Surna announced its largest contract in history (Jan 2021) and more recently when the company announced preliminary Q1 bookings ahead of the full earnings release. I don't think the company would have pre-released all of their good news especially with the shareholder meeting approaching, so I expect to be pleasantly surprised by Q1 earnings.
Shareholder Meeting, Proxy and Roadmap
Surna's management team laid out a roadmap in the past and I'm excited to learn more about where this stands, how the company is faring through the pandemic, and what's next for the roadmap. Much of this was laid out in the February 2020 investor letter and November 2020 investor presentation. Notably, Surna appears to be executing on its plan to deepen its product offering to attract new customers as well as its plan to add new product offerings to increase average order size.
We have also seen that the biography Surna uses in press releases is changing and seems to almost dance around the words "cannabis" and "marijuana," a recent development. In fact, reading the company's biography in the most recent press release you'll see sentences like "our customers include commercial growers" and "we leverage our experience in this space to bring value-added climate control solutions to our customers." The point is, it looks like Surna is finally ready to start putting energy and dollars behind branching outside of cannabis cultivation, something shareholders have been asking about for years. I can't wait to hear more! How many companies in the cannabis industry can you think of that can serve customers outside of the industry?
Surna will hold a shareholder meeting on May 28. There are several important votes in the proxy materials - I encourage all shareholders to review the proxy statement closely. I'm not going to dive into each vote here (although I welcome the opportunity to do so in the comment section) but I have read through them in detail and want to offer my general sentiment.
I'd like to hear more of the "Why" before voting but I am generally supportive of the roadmap laid out by this management team in the past. If management thinks that the proxy statement it has presented is the best chance to uplist or clean up the share structure or utilize shares as currency for mergers/acquisitions to add value to shareholders, I'm inclined to agree. If these changes help Surna uplist to Nasdaq or another exchange, meet inclusion criteria for various ETFs and institutional investors, and become a more widely held issue then there's no question we would see the stock higher than it is today.
I'm excited to learn more about the roadmap and company outlook and think the read-out of the investor meeting could prove a significant catalyst for the stock.
X Factor (Legislation, Partnerships, M&A, etc)
There is always the "X factor" with catalysts, those that are mere speculation or are impossible to predict if and/or when they might come to fruition.
The first of these is the likelihood of federal legislation allowing the cannabis industry to access banking. While many of Surna's customers are well-capitalized enough to plunk down the large amount of capital it takes to properly build out a state-of-the-art grow facility, there is no doubt that some players in the industry are not as well capitalized. Especially as legislative bodies work to address historical inequalities as they create frameworks and systems around their legal cannabis industry, it is inevitable that the federal government will allow cannabis entrepreneurs to access the federal banking system. We know that incremental dollars spent on Surna's systems are recaptured via increased yields and favorable ROI. As such there is no doubt in my mind that if the federal government allows access to capital we will see a significant increase in the number of unique customers who are suddenly well-capitalized enough to buy from Surna. This moment could come soon, as the U.S. House of Representatives passed their "SAFE Banking Act" measure last week.
There is always the possibility of an acquisition of Surna, something I have quietly worried about for a while. Perhaps Carrier (CARR), Trane (TT), or Johnson Controls (JCI) wishes to enter the cannabis space and leapfrog into the dominant spot by pairing Surna's technology with their own HVAC behemoth. As a current Surna shareholder, I don't want to see this. Yes, an acquisition would cause the stock to spike and offer a quick gain. But even if the premium offered by an acquirer was 2x or 3x today's levels I think this would be far below the company's fair market value. Though not a likely near-term catalyst, buying one's way into this industry via acquisition of Surna makes sense for any number of companies and it could happen any day.
Surna has recently joined a group of companies called GroAdvisor which appears to be building a one stop shop for those wishing to get into marijuana cultivation. Is GroAdvisor some kind of pre-cursor to a merger between Surna and its peers? I'd like to learn more about the company's overall roadmap at the investor meeting.
Surna also just announced a partnership with RSX Enterprises whereby the latter will handle key sales and marketing work for Surna in the U.S., Canada, and Mexico. Notably, the target market here is "indoor cultivators of all types," seemingly a major hint that Surna will continue to branch beyond the cannabis industry and that this partnership is part of that effort.
Final Thoughts
I have followed Surna since 2014 and owned shares in the stock for nearly as long. I'm still here because every time I take a fresh look at the company I return to the investment thesis that the stock is unknown, undersubscribed, and generally misunderstood. This is a solid business providing a niche product that is desperately needed by its customers, which also happens to operate in one of the hottest sectors of the economy.
Surna's existing customers are, themselves, growing and Surna's potential customer-base grows every time voters head to the polls. Surna's market isn't just limited to one state or province - like most cannabis industry companies - or even limited to one country. Indeed, Surna is free to bring its high-efficiency technologies to non-cannabis agriculture and other applications and I expect it will do so in greater frequency beginning in 2021.
Of course no investment is without risk and you should certainly weigh whether a ~$20M company is right for your portfolio. For me, the potential return far outweighs the potential risk. I suspect Surna's liquidation value (inventory, book of customers, proprietary information/technology, etc) is right around where the stock trades today.
There is reason to believe that the stock is primed for upside surprise. Look no further than the price action of January 14th of this year, not-so-coincidentally the day Surna announced its largest contract in history. The stock surged more than 200% that day, opening at $0.0729 per share and closing at $0.1999. More recent (though less dramatic) moves following positive news suggest that strong Q1 earnings and a clear roadmap for the future could finally trigger the price adjustment I have been expecting for months and even years.
Here's the bottom line: Surna booked $7.9 million worth of new business in Q3 and Q4 of 2020 and $5.5 million in Q1 of 2021. With $13.3 million worth of new business booked in just the past three quarters and Surna's sales apparatus hitting its stride as the economy starts to look past the pandemic, I think it is entirely likely Surna will book more than $20 million worth of revenue in 2021. With the stock trading around a $20 market capitalization this means Surna trades at 1x forward sales. Consider that companies in the cannabis space regularly command a price/sales multiple of 3x to 10x.
Assuming a reasonable 5x multiple to Surna's likely 2021 sales, I think the stock should - today - trade around a $100M market capitalization, nearly 5x where the stock closed on Thursday.
Disclosure: I am/we are long SRNA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Always do your own DD!
Accumulate and hold!
https://seekingalpha.com/article/4422994-surna-stock-srna-dont-call-comeback
Accumulate and hold!
Always do your own DD!
Mountain Analytic
Mountain Analytic
Long ideas
Services
Surna: Don't Call It A Comeback
Apr. 30, 2021 2:35 PMSurna Inc. (SRNA)
Summary
Surna remains one of the few cannabis stocks that knows no geographical bounds and is poised to expand outside of marijuana cultivation.
Even after surging 21% since the start of April, Surna still trades around 1x 2021 revenue, a steep discount relative to industry peers.
I expect near-term catalysts to push the stock to new levels within the month of May, starting with Q1 earnings due by mid-May.
Photo by OpenRangeStock/iStock via Getty Images
Those who follow me or who follow Surna (OTCQB:SRNA) know that there aren't a lot of people following the company. And I get it - the small public issue commands a market capitalization around $21 million, just barely enough for Seeking Alpha to allow coverage. But for those comfortable with nano-cap risk and looking for a "pick and shovel" cannabis industry investment, Surna checks all the boxes. And even a few bonus boxes.
Has a history of real sales and financial performance? Check.
On a path to profitability? Check.
Trades at a steep discount to peers? Check.
Primed to expand outside of the cannabis industry? Check plus.
If you're just hearing about Surna now here's the nitty gritty. This Boulder, Colorado-based company specializes in hardware and design strategies used to create and maintain the highly-specific conditions required to grow marijuana, something the industry refers to as controlled environment agriculture, or CEA.
Translation: Marijuana is a finicky plant and requires specific light, temperature, humidity and other environmental controls. Surna makes the systems that help growers grow.
Because Surna doesn't actually touch marijuana it isn't limited to a certain state or country. Of course, one could grow marijuana without Surna's systems, however they would be unlikely to do so as profitably. Surna's customers have done the ROI analysis, are well-capitalized enough to make major investments in their grow operation build-out, and understand that in a commodity business like that of marijuana cultivation, the low cost producer wins.
And the cherry on top farther down the road... because Surna's systems help growers maintain specific environments that aren't achieved outdoors and in nature, Surna's systems have immediate transferability to urban agriculture and agriculture conducted in environments that would otherwise be too hot or too cold to yield a crop.
Let's review each of the near term catalysts.
Earnings
We expect Surna to release its Q1 earnings within the next two weeks. Given that we have already received a preview of Q1 and know that bookings have returned to and even surpassed pre-pandemic levels, I think it's safe to say this earnings report will be well received. What we know already is that Surna booked $5.5M in new business during the first quarter. We also know that Surna booked a non-cannabis contract worth more than $100,000, the first such contract we have ever learned of.
We know from previous filings that some of its biggest contracts are coming from repeat-customers. I'd certainly like to know whether that was the case with any of the new bookings when we see Q1 earnings, as well as our first look at revenue for the year.
The market absolutely loved when Surna announced its first profitable year (FY2019), when Surna announced its largest contract in history (Jan 2021) and more recently when the company announced preliminary Q1 bookings ahead of the full earnings release. I don't think the company would have pre-released all of their good news especially with the shareholder meeting approaching, so I expect to be pleasantly surprised by Q1 earnings.
Shareholder Meeting, Proxy and Roadmap
Surna's management team laid out a roadmap in the past and I'm excited to learn more about where this stands, how the company is faring through the pandemic, and what's next for the roadmap. Much of this was laid out in the February 2020 investor letter and November 2020 investor presentation. Notably, Surna appears to be executing on its plan to deepen its product offering to attract new customers as well as its plan to add new product offerings to increase average order size.
We have also seen that the biography Surna uses in press releases is changing and seems to almost dance around the words "cannabis" and "marijuana," a recent development. In fact, reading the company's biography in the most recent press release you'll see sentences like "our customers include commercial growers" and "we leverage our experience in this space to bring value-added climate control solutions to our customers." The point is, it looks like Surna is finally ready to start putting energy and dollars behind branching outside of cannabis cultivation, something shareholders have been asking about for years. I can't wait to hear more! How many companies in the cannabis industry can you think of that can serve customers outside of the industry?
Surna will hold a shareholder meeting on May 28. There are several important votes in the proxy materials - I encourage all shareholders to review the proxy statement closely. I'm not going to dive into each vote here (although I welcome the opportunity to do so in the comment section) but I have read through them in detail and want to offer my general sentiment.
I'd like to hear more of the "Why" before voting but I am generally supportive of the roadmap laid out by this management team in the past. If management thinks that the proxy statement it has presented is the best chance to uplist or clean up the share structure or utilize shares as currency for mergers/acquisitions to add value to shareholders, I'm inclined to agree. If these changes help Surna uplist to Nasdaq or another exchange, meet inclusion criteria for various ETFs and institutional investors, and become a more widely held issue then there's no question we would see the stock higher than it is today.
I'm excited to learn more about the roadmap and company outlook and think the read-out of the investor meeting could prove a significant catalyst for the stock.
X Factor (Legislation, Partnerships, M&A, etc)
There is always the "X factor" with catalysts, those that are mere speculation or are impossible to predict if and/or when they might come to fruition.
The first of these is the likelihood of federal legislation allowing the cannabis industry to access banking. While many of Surna's customers are well-capitalized enough to plunk down the large amount of capital it takes to properly build out a state-of-the-art grow facility, there is no doubt that some players in the industry are not as well capitalized. Especially as legislative bodies work to address historical inequalities as they create frameworks and systems around their legal cannabis industry, it is inevitable that the federal government will allow cannabis entrepreneurs to access the federal banking system. We know that incremental dollars spent on Surna's systems are recaptured via increased yields and favorable ROI. As such there is no doubt in my mind that if the federal government allows access to capital we will see a significant increase in the number of unique customers who are suddenly well-capitalized enough to buy from Surna. This moment could come soon, as the U.S. House of Representatives passed their "SAFE Banking Act" measure last week.
There is always the possibility of an acquisition of Surna, something I have quietly worried about for a while. Perhaps Carrier (CARR), Trane (TT), or Johnson Controls (JCI) wishes to enter the cannabis space and leapfrog into the dominant spot by pairing Surna's technology with their own HVAC behemoth. As a current Surna shareholder, I don't want to see this. Yes, an acquisition would cause the stock to spike and offer a quick gain. But even if the premium offered by an acquirer was 2x or 3x today's levels I think this would be far below the company's fair market value. Though not a likely near-term catalyst, buying one's way into this industry via acquisition of Surna makes sense for any number of companies and it could happen any day.
Surna has recently joined a group of companies called GroAdvisor which appears to be building a one stop shop for those wishing to get into marijuana cultivation. Is GroAdvisor some kind of pre-cursor to a merger between Surna and its peers? I'd like to learn more about the company's overall roadmap at the investor meeting.
Surna also just announced a partnership with RSX Enterprises whereby the latter will handle key sales and marketing work for Surna in the U.S., Canada, and Mexico. Notably, the target market here is "indoor cultivators of all types," seemingly a major hint that Surna will continue to branch beyond the cannabis industry and that this partnership is part of that effort.
Final Thoughts
I have followed Surna since 2014 and owned shares in the stock for nearly as long. I'm still here because every time I take a fresh look at the company I return to the investment thesis that the stock is unknown, undersubscribed, and generally misunderstood. This is a solid business providing a niche product that is desperately needed by its customers, which also happens to operate in one of the hottest sectors of the economy.
Surna's existing customers are, themselves, growing and Surna's potential customer-base grows every time voters head to the polls. Surna's market isn't just limited to one state or province - like most cannabis industry companies - or even limited to one country. Indeed, Surna is free to bring its high-efficiency technologies to non-cannabis agriculture and other applications and I expect it will do so in greater frequency beginning in 2021.
Of course no investment is without risk and you should certainly weigh whether a ~$20M company is right for your portfolio. For me, the potential return far outweighs the potential risk. I suspect Surna's liquidation value (inventory, book of customers, proprietary information/technology, etc) is right around where the stock trades today.
There is reason to believe that the stock is primed for upside surprise. Look no further than the price action of January 14th of this year, not-so-coincidentally the day Surna announced its largest contract in history. The stock surged more than 200% that day, opening at $0.0729 per share and closing at $0.1999. More recent (though less dramatic) moves following positive news suggest that strong Q1 earnings and a clear roadmap for the future could finally trigger the price adjustment I have been expecting for months and even years.
Here's the bottom line: Surna booked $7.9 million worth of new business in Q3 and Q4 of 2020 and $5.5 million in Q1 of 2021. With $13.3 million worth of new business booked in just the past three quarters and Surna's sales apparatus hitting its stride as the economy starts to look past the pandemic, I think it is entirely likely Surna will book more than $20 million worth of revenue in 2021. With the stock trading around a $20 market capitalization this means Surna trades at 1x forward sales. Consider that companies in the cannabis space regularly command a price/sales multiple of 3x to 10x.
Assuming a reasonable 5x multiple to Surna's likely 2021 sales, I think the stock should - today - trade around a $100M market capitalization, nearly 5x where the stock closed on Thursday.
Disclosure: I am/we are long SRNA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Always do your own DD!
Accumulate and hold!
Accumulate and hold! This can get only much better!
Always do your own DD!
Accumulate and hold!
Always do your own DD!
$1
Tis just can't be overlooked!
The Q1 2021 bookings were up 388% over the same period last year and were 51% higher than Q4 2020.
Q1 2021 and Q4 2020 bookings together represent a two-consecutive-quarter growth of 114% over the comparable Year-Over-Year period.
Trailing three quarters booking performance (Q3-Q1) was up 94% over the comparable Year-Over-Year period.
Bookings included six commercial sales contracts over $100,000, including one non-cannabis facility, totaling $5.0M in new commercial contracts and $0.5M in additional equipment orders.
Accumulate and hold!
Always do your own DD!
“The extraordinarily positive results in new contract bookings over the last three quarters are driven by the commitment from our talented teams at Surna. We realize that Q1 is now in the rear-view mirror, but we believe Surna is well positioned to continue to deliver strong growth and is preparing for more client wins, new product rollouts, and an expansion of new services offerings.”
Accumulate and hold!
Always do your own DD!
Very nice analysis Avlnco!
Accumulate and hold!
Always do your own DD!
OUTSTANDING!
The Q1 2021 bookings were up 388% over the same period last year and were 51% higher than Q4 2020.
Q1 2021 and Q4 2020 bookings together represent a two-consecutive-quarter growth of 114% over the comparable Year-Over-Year period.
Trailing three quarters booking performance (Q3-Q1) was up 94% over the comparable Year-Over-Year period.
Bookings included six commercial sales contracts over $100,000, including one non-cannabis facility, totaling $5.0M in new commercial contracts and $0.5M in additional equipment orders.
Accumulate and hold!
Always do your own DD!
Tony McDonald, Surna’s Chairman and CEO comments, “The extraordinarily positive results in new contract bookings over the last three quarters are driven by the commitment from our talented teams at Surna. We realize that Q1 is now in the rear-view mirror, but we believe Surna is well positioned to continue to deliver strong growth and is preparing for more client wins, new product rollouts, and an expansion of new services offerings.”
Accumulate and hold!
Always do your own DD!
The Q1 2021 bookings were up 388% over the same period last year and were 51% higher than Q4 2020.
Q1 2021 and Q4 2020 bookings together represent a two-consecutive-quarter growth of 114% over the comparable Year-Over-Year period.
Trailing three quarters booking performance (Q3-Q1) was up 94% over the comparable Year-Over-Year period.
Bookings included six commercial sales contracts over $100,000, including one non-cannabis facility, totaling $5.0M in new commercial contracts and $0.5M in additional equipment orders.
EXTRAORDINARY!
Shorts just cover and go long, start your R/S campaign again around $1.
Always do your own DD!
EXTRAORDINARY!
SRNA
+29.7578%
Bookings up 388% First Quarter Year Over Year, 51% over Previous Quarter
Accumulate and hold!
Always do your own DD!
The Q1 2021 bookings were up 388% over the same period last year and were 51% higher than Q4 2020.
Q1 2021 and Q4 2020 bookings together represent a two-consecutive-quarter growth of 114% over the comparable Year-Over-Year period.
Trailing three quarters booking performance (Q3-Q1) was up 94% over the comparable Year-Over-Year period.
Bookings included six commercial sales contracts over $100,000, including one non-cannabis facility, totaling $5.0M in new commercial contracts and $0.5M in additional equipment orders.
Accumulate and hold!
Always do your own DD
Tony McDonald, Surna’s Chairman and CEO comments, “The extraordinarily positive results in new contract bookings over the last three quarters are driven by the commitment from our talented teams at Surna. We realize that Q1 is now in the rear-view mirror, but we believe Surna is well positioned to continue to deliver strong growth and is preparing for more client wins, new product rollouts, and an expansion of new services offerings.”
Accumulate and hold!
Always do your own DD!
WOW! Amazing!
Accumulate and hold!
Always do your own DD!
Good job, SavageWest!
Accumulate and hold!
Alaways do your own DD!