Aleafia Health Inc. (ALEAF)

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"3 Speculative Pot Stocks to Consider Buying Right Now"

https://www.fool.com/investing/2019/04/02/3-speculative-pot-stocks-to-consider-buying-right.aspx

From Motley Fool article

Aleafia Health

Arguably, the most intriguing speculative marijuana stock is small-cap Aleafia Health (NASDAQOTH:ALEAF), which is probably an unknown for most cannabis investors.

Nearly three weeks ago, Aleafia completed its all-stock acquisition of Emblem, creating a considerably larger network of health clinics throughout Canada, but more importantly bringing a lot of future cannabis production under one umbrella.

The combination of Aleafia Health and Emblem now has 40 branded clinical health centers that have treated approximately 60,000 patients to date in Canada. Since customer loyalty is tough to come by in the early stages of the marijuana industry's maturation process, operating 40 health clinics provides Aleafia with an opportunity to supply these patients with in-house cannabis products. That should help improve loyalty, as well as lift its operating margins since medical pot patients are far more likely than recreational users to purchase higher margin alternative cannabis products.
A tipped over prescription bottle containing dried cannabis that's lying atop a doctor's prescription pad.

Image source: Getty Images.

When fully operational, Aleafia Health is expected to generate 98,000 kilos in peak annual output, with Emblem adding another 40,000 kilos. Combined, we're talking about 138,000 kilos of peak yearly production, which would actually slot Aleafia in as the nation's seventh-largest grower. That's pretty impressive for a company that doesn't even have a $400 million market cap at the moment.

The biggest question mark is what Aleafia might do to sell its cannabis beyond just its network of patients. This uncertainty, along with the issuance of new shares to finance the Emblem deal, looks to be what's holding this stock back. But given the proper amount of time and some provincial dealmaking, Aleafia Health could be quite the bargain.