In Part 1, with the help of my Cannabis Investor Portal, I narrowed 29 cannabis stocks down to 11 companies with less than $400 million in market cap and a price-to-sales (P/S) of 5 or less. In Part 2, I eliminated the 5 companies I felt would do well in the future, but not gain 549% in the next 12 months. I will now cover the final six – each with their own article and analysis on why I think a 549% is possible. Let’s begin.
Hollister Biosciences (OTC: HSTRF, CSE: HOLL)
Price target to gain 549%: $1.98 (from 36 cents)
I started a position in Hollister Biosciences yesterday because it’s a cannabis and hemp wholesale business in adult-use states California and Arizona, and unknown to most, a psychedelic play.
Hollister has products in over 280 dispensaries throughout California and over 90 dispensaries throughout Arizona. Their stated goal is to be in 450 dispensaries by the end of the year and is pushing for direct to consumer delivery in California. California is the world’s largest cannabis market and Arizona is one of the fastest-growing markets.
A look at the financials
A look at Hollister’s most recent earnings report points to a bright future. CDN$14.93 million and CDN$2.53 million in EBITDA – already EBITDA positive with 17% EBITDA margins. Q3 2021 grew year-over-year from $77,147 to $9.4 million, a 12,135% growth.
Hollister’s balance sheet is solid, increasing total assets from Dec 31, 2019 from $5.8 million to $13.2 million as of Sep 30, 2020. In the same period Current assets improved from $2.1 million to $5.7 million, above their current liabilities of $4.3. million.
2021 is an Arizona boom year
In a brilliant move last March, Hollister acquired the Venom Extracts brand for CDN $20 million. In 2020, Venom Extracts generated over CDN$ 40 million in revenue (and CDN $4.9 million in adjusted EBITDA) up from CDN $16.4 million in 2019, a 144% year over year revenue increase. Sales for December totaled CDN $5.5 million, pointing to CDN$ $60 – $100+ million in 2021 sales. Per the company’s investor presentation, they have secured Venom Extract’s entry into Nevada and are pushing to enter Ohio, Michigan, and Oklahoma. It looks like explosive growth will continue.
California statewide delivery coming soon
In December 2020, Hollister announced success with their direct-to-consumer delivery with their Dreamy Delivery platform and expects California-wide delivery in the near future. This will go a long way in further increasing margins in California in 2021. Being in 280 California dispensaries is nice, but being able to deliver to every person in California is better.
Hollister is a psychedelic play
Hollister is also a way to play the booming psychedelic market that is expected to explode in the next few years. AlphaMind, 100% owned by Hollister, last June announced plans to launch medicinal mushroom-based capsule and powder product lines.
In Conclusion
Incredibly, Hollister’s stock sits are a current Price/Sales (P/S) ratio of 1.8. To go up 549%, they would have to get to P/S ratio of 10. Per my Cannabis Investors Portal, the average P/S ratio for cannabis stocks is 11. Considering Arizona just legalized adult recreational use and Hollister is an obvious acquisition target, this pick feels like a no-brainer.
Next: Harborside
NOTE: Micro-cap stocks are speculative in nature and this article should not be considered advice to buy the stock. Do your own research and consult a financial expert before investing.
