The Valens Company Inc. (VLNS)

[FUNMAN]

Since Valens PPS is moving in the opposite direction of the press release news, it can only be because The Street has been putting pressure on the overall cannabis industry and specifically regarding Valens, doesn't like dilution, anticipates revenues aren't growing fast enough and profits will continue to be deferred.

Some of that might be short sighted if your view is long term.

Any significant downward PPS movement will have to be viewed as a buying opportunity if Valens revenue expansion and EBITDA indicates they continue to execute on their growth plans, but struggle to make net profits. To me that indicates more patience is needed, because they are moving in the right growth direction.

Their last USA acquisition (Green Roads) should add significant revenues, but they announced they are investing approximately $10 million into the business to capitalize on the anticipated growth of the US CBD market. Revenue growth will follow, but $10M CapEx has to dampen EPS expectations.

The Street wants cannabis profits now. We're looking for the Green Roads EBITDA indicator which they probably won't break out for us.

But our measure will be if all the performance Milestones are met in 2022, and they end up paying $40M for the acquisition, the transaction represents approximately 4.5x fiscal 2022 EBITDA. That's an incredibly reasonable price to pay when other cannabis company M&A's having them spending like drunken sailors. (For example, look at Trulieve's M&A of Harvest Health for approximately $2.1B, and GTI's $80M Dharma Pharmaceuticals M&A for 1 store and 4 licenses in the newly announced rec legal state of VA.)

Lastly, let's not forget that Valens reloaded the M&A coiffures.

They didn't load the gun without having another M&A move in mind.

Valens is a very good long term cannabis play.

I expect to make up all of my MediPharm losses right here, and leave my Medi shares to ride throughout their international expansion which may take years. It's a crap shoot to see if they can execute or end up "a failed also ran"?

Right now Valens is the obvious original Extractor winner.

mauiguy2 Tuesday, 07/13/21 07:57:59 AM
Re: FUNMAN post# 3809
Post # 3810 of 3810

Unfortunately, we've had the opposite of a run-up before tomorrow's earnings report. Hope that all changes after the numbers are released.