Major Canadian cannabis stocks were frustrated. Aurora Cannabis (WKN: A12GS7) had a terrible start in the first trading week on the New York Stock Exchange. Canopy growth (WKN: A140QA) lost more than 25% of its market capitalization last week.
But there is a new weed that weathered the storm. The performance of this stock is higher than this year's aurora, canopy and almost all other cannabis stocks.
So what? Origin House (SIN: A2DH0P). The stock was traded on the Canadian Stock Exchange (CSE) on October 22nd in the United States. Origin House is not entirely new.
Under a new flag
By last week, Origin House was still known as CannaRoyalty. What's behind the name change? Well, the company wanted a new corporate image that clearly defined its goal of becoming an "excellent global cannabis brand."
CannaRoyalty was called the origin of the company. The real business model focused on marijuana loyalty streaming. Marijuana In royalties streaming, marijuana companies provided a price in return for crop production or intervention rates. But the company's strategy has changed over time.
Origin House is currently focused on distributing cannabis products in California. US law is the largest legal marijuana market in the world. And Origin House is number one in the California Cannabis market.
The company currently has more than 50 brand partners. About 70% of California retailers sell more than 130 cannabis brand products. Origin House also owns and sells several brands.
But while Origin House is a major player in the massive California market, Canada has stepped in. In September, the company announced its acquisition of 180 Smoke, a leading Vape dealer with 26 stores and a powerful online site.
New name, new logo and new stock ticker: Origin House expects to start a good time. Marc Lustig said the first half of 2018 in California was somewhat difficult due to the rugged market launch of the national regulated recreational drug market. But now Lustig thinks the situation is "pretty great."
He was convinced that Origin House would be profitable in 2019. Technically, the company made a profit in the second quarter. However, the positive result is attributable to the sale of assets. But Origin House is now going to help sustainable profitability.
At least one analyst thinks Origin House will generate nearly $ 200 million next year and $ 420 million in 2020. This is about $ 325 million. Origin House has no sales forecast yet, but analysts' estimates should be viable.
Rustig is currently producing 70% of its sales and 30% of its own brand. His goal is to change the revenue share to almost 50:50 by early 2019. Origin House plans to achieve this by launching a new brand every month.
This is part of Origin House's three-phase long-term strategy. First, they want to expand that base as California's leading cannabis seller. Phase 2 uses data derived from sales activities to create more successful brands and promote existing brands in the California market.
The third stage of the Origin House strategy can be more successful in the long run. The company plans to repeat its success in California in other fast – growing markets. 180 Smoke Purchase is an example of this strategy. Lustig suggested that Origin House could be extended to neighboring US states in Nevada in the future. He decides that the company will be more disciplined than going into new markets first.
Is it better than Big Player?
As I said, Origin House easily outperforms other cannabis stocks, including the two largest Canopies and Aurora. But is Origin House better with long-term investments than large corporations in the industry? I think so.
Beacon Securities, an investment company, thinks distributors and retailers can be the top league for the brand of cannabis. As far as the US market is concerned, I agree. Origin House is well positioned to select some of our brands with our brand partners.
Canopy Growth and Aurora Cannabis are hand-tied when working in the United States. But it is not the Origin House. It should be remembered that the United States accounts for 85% of the global cannabis market. Legalized countertop sales By 2022, the US will still account for nearly three-quarters of cannabis sales, even if the Canadian market for cannabis and the medical cannabis market are accepted elsewhere.
If so, there is a rating. After the recent plunge, Canopy's market capitalization is close to $ 8 billion and Aurora's market cap is close to $ 7 billion. Origin House's market capitalization is close to $ 300 million. The value of stocks based on realistic growth potential with a $ 250 million revenue potential by 2020 looks very attractive in the short term. I can not say that about big cannabis stocks.
In August, I said that CannaRoyalty is the best, somewhat unknown cannabis. But that is no longer true. Now this honor is Origin House.
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Motley Fool recommends stocks from Origin House. Keith Speights does not own listed stocks.
This article It was released on 28.10.2018 at Fool.com. Our readers have been translated to participate in discussions.