CEA Industries Inc. (CEAD)

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Surna Inc. Is Well On It’s Way To Being A Prime Turnaround Story In 2021

Early last month, Surna Inc. (OTCQB: SRNA) announced third quarter operating and financial results for the period that ended on September 30th. Due to the improvements that were made to the company’s balance sheet during the quarter, we were surprised by the muted response from the market.

At current levels, Surna is valued at approx. $5 million on a market capitalization basis. As of September 30th, the company reported to have more than $2 million of cash on the balance sheet. Surna ended 2019 with less than $1 million of cash on the balance sheet and we are favorable on the actions that have been taken to strengthen it.

During the third quarter, Surna reported to have generated $1,635,000 of revenue. Although this number is substantially lower than the amount of revenue that was reported in the third quarter of 2019, the company recorded margin expansion and we are favorable on this metric.

Over the next year, we expect Surna to benefit from the launch of new state-of-the-art products. The company has been focused on expanding its portfolio of products and services and we expect this to serve as a growth driver in the near and long-term. In a post-COVID market, we have seen a spike in increased demand for cannabis and expect Surna to record higher sales as a result of this trend.

As it relates the types of clients that Surna works with, we have noticed a shift from Canada to the US. In 2019, most of the company’s revenue was from Canadian companies. So far this year, the company has seen a change in its customer profile and has seen an increase in sales to US companies.

In 2021, we expect Surna’s sales to be even more weighted to the US market and are bullish on the potential that is associated with this burgeoning market. Based on the performance of other ancillary cannabis companies, we are surprised by the market’s lack of interest in Surna. We are of the opinion that the market is missing out on something with Surna and find the valuation disparity when compared to other ancillary cannabis companies to be attractive.

From a profitability standpoint, Surna has been impacted by the COVID pandemic and we expect the trend to be transitory. A highlight from the quarter is related to how the management team has executed on a disciplined cash management strategy and we are favorable on this aspect of the story.

The strength of Surna’s management team has played an important role in how the business has turned around. The COVID pandemic created a significant headwind for Surna and we are favorable on how the management team has navigated through choppy waters. Going forward, we believe that Surna is well positioned to be a beneficiary of the new White House administration and is an opportunity to be aware of.

The name of the game for Surna is execution and we believe the company has the resources and the human capital that are needed to be successful. We expect 2021 to be a banner year for the business and will monitor how the Surna story continues to evolve.

If you are interested in learning more about how Surna is positioned to capitalize on the ancillary cannabis industry, please send an email to [e-mail] with the subject “Surna” to be added to our distribution list.
















https://technical420.com/cannabis-article/surna-inc-is-well-on-its-way-to-being-a-prime-turnaround-story-in-2021/