The case in favor of buying soon
There are a few reasons why it might be a good idea to buy Sundial's stock, starting with its latest earnings report from the first quarter of 2021. Last quarter, it reported positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first time ever. While the $3.3 million may not be much, it could be the start of a favorable trend. The same goes for the company's selling, general, and administrative (SG&A) costs, which dropped by 7% compared to the prior quarter.
Acquisitions are also on the horizon. In the third quarter, it plans to purchase Inner Spirit Holdings and the Spiritleaf cannabis network for $131 million in cash and stock. By the end of the summer, the company hopes to have a network of 100 stores distributing its products across all but one of the provinces of Canada, thanks to the purchase. That could easily be a massive catalyst for revenue growth, but the new stores also entail a substantial overhead cost that investors shouldn't discount.
Finally, it's important to recognize that Sundial's cash position of $1.08 billion is outrageously strong, especially considering that it has no outstanding debt. With such a large war chest for the company's size, management has a clear path to continue the massive expansion of the company's retail footprint and cultivation capacity if it chooses to do so.
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