Trump's statements on Friday that cannabis enforcement is a state's rights issue should continue to help both KSHB and Sugarmade (SGMD). Still the only two cannabis stocks I need to own. Up big on both and will continue to hold- will buy more on any "correction"
Interesting dynamic in KUSH and SGMD valuations:
Relative to Kush and Sugarmade, on 50M revenue for SGMD (Bizright, Budlife, Stix) in 2018 and the increase of shares to 1B due to the structure of the merger, we give SGMD a market cap of approx. 210M.
When we do a comparison to other companies, such as KSHB, we find that KSHB trades at 12x sales with no preparatory products.
If we give a price to sales of 12x, we should have a price target for SGMD at approx. 0.70. We believe SGMD is DRASTICALLY UNDERVALUED at today's price. Within the next week or so, we will have future guidance by Jimmy.
Right now, we know that Bizright will bring in approx. 40M in 2018. We believe 50M in sales is obtainable and is a low target of this year sales.
This is a very exciting and unusual merger. When was the last time a smaller company bought out a larger company? This only happens once every blue moon. We are speculating that Bizright sees the HUGE POTENTIAL in the marijuana storage business, hence BudLife. You have to ask yourself why a larger company that is growing at 33% sales would want to merge with a smaller company. Our belief is they already know the huge market that is in front of them. Companies are known for having future purchase orders to make large deals. We believe that's how SGMD made this deal happen.
