A Rising Tide Will Lift All Boats...and Blast This One to the Moon
01/17/2021 Stonks Rising by byu/raw_salmon and Penniless Reddit
High Tide Inc ($HITIF/$HITI) - A Rising Tide Will Lift All Boats...and Blast This One to the Moon ????????????????????????
DD
It's not every day you find a promising penny stock before it pops, and if you've been looking for one then you're gonna want to read this. I've been wanting to write a definitive DD post for this stock for a while but haven't had the time until now. There's been a few good posts about it but none have gotten the attention they deserve. A month ago, I learned about HITIF from a Reddit thread, thought it was too good to be true, spent 2 full days of research trying to find something wrong with it...and couldn't.
This penny stock is already incredibly undervalued based on current fundamentals without even considering its future growth plans. This isn't speculative; HITIF popping to the $2-5+ range is a matter of when, not if. If you don't believe me, read below.
All dollar figures are in USD
Date: Jan 18, 2021
Current Share Price: $0.21
Market Cap: $95.5 Million
Number of Shares: 449,400,000 Shares (JohnCM note: If HT is at $0.40 at time of unlisting to NASDAQ, a reasonable reverse split would be 1 for 12 resulting in $4.80 per share and 37,500,000 million shares outstanding).
What is High Tide Inc.?
High Tide Inc. is a manufacturer, distributor, and retailer of cannabis products and accessories based out of Canada. HITIF prides itself with being the "One Stop Shop of Cannabis" in Canada, with an unmatched store inventory selection and over a decade of experience in the industry.
Okay, so what? Why should I care about this stock?
I got tons of excellent reasons why, and most of them are based on current fundamentals instead of speculation:
HITIF is massively undervalued, has amazing financials/balance sheet, and an all-but-guaranteed future of exponential growth.
HITIF is currently the LARGEST single cannabis retailer in Canada in terms of revenue, with 23% of its revenue from the US.(JohnCM note: Trying to find the business revenue that is taking place in the U.S.).
HITIF just turned a profit in Q3 2020, with a $3.36M net income and 180% increase in revenue year-over-year. (JohnCM note: I'll have to take another look at the quarterly. Hard to believe that they were actually net positive in earnings).
HITIF recently acquired Meta Growth Corp., almost doubling its store count from 37 stores to 67 stores (This hasn't even been reflected in an earnings report yet).
Post-merger, HITIF earned $117M in revenue ttm with its CURRENT assets (Q3 2020 annualized with Meta Growth numbers included). This $117M revenue estimate brings its P/S ratio to 0.82, which is exceptional and a strong indicator that this stock is undervalued.
HITIF will almost double its current store count from 67 stores to 115 stores by the end of 2021. The majority of these new stores will be in Ontario, which is Canada's largest cannabis market and has been mostly untapped by HITIF so far.
HITIF has strong vertical integration (design, manufacturing, distribution, and retail) and a 41% gross margin.
HITIF has secured several licensing deals for its accessories (Snoop Dogg, Trailer Park Boys, Kevin Smith, Guns N' Roses, etc.).
HITIF has great management that has proven it can execute and has consistently reduced operating expenses vs gross revenues year after year, thus maximizing profit. This proven track record of profit optimization will undoubtedly encompass their newly-acquired Meta Growth assets and upcoming 2021 stores.
Their CEO Raj Grover has even done a Reddit AMA.
HITIF will focus on expansion in the US after it's done with the Ontario market, and the industry as a whole will benefit from a presidency, house, and senate that is controlled by Democrats. With 23% of their revenue already coming from the US, HITIF should have little difficulty expanding their US operations further after legalization increases.
Aphria and Aurora Cannabis are invested in HITIF.
HITIF is the first in its sector to apply for the NASDAQ and will likely get uplisted, which will bring in institutional investors and skyrocket this thing.
Some are concerned that HITIF doing a reverse split to get uplisted to the NASDAQ will hurt the share price. Here's my counterargument:
HITIF is now profitable. They have a sustainable balance sheet that will only continue to improve. Though some retail investors will get scared and sell, this will be nothing compared to the amount of buying from larger investors once it gets more visibility from the uplisting. A small dip from a reverse split is possible but will quickly get overshadowed by the whales. I'm not concerned about this as the pros far outweigh any cons. Most companies that reverse split do it to stay in the NASDAQ because of poor financials. HITIF is the opposite of that. The uplisting is GOOD. (JohnCM note: It is true that reverse splits are usually bad news, but if the company is in good shape, and this gets them to the NASDAQ, if can be a good thing. And resulting in a low O/S number).
