Rich loves bringing new and upcoming pot stocks to the attention of his community. Today, he profiles Meta Growth Corp. (TSXV:META) (OTCPK:NACNF), an Ontario-based cannabis retailer with a powerful claim to fame.
According to the company’s recent press release, Meta is Canada’s “largest publicly traded recreational cannabis retailer by revenue.” This is a tremendous accomplishment for such a relatively unknown cannabis company. As Rich notes, Meta Growth is—in all likelihood—seriously undervalued at its current price.
“Meta was at $1.00 in April, and now it’s at $0.18. That’s despite the fact that this company keeps getting better and better,” he says. “That more than 400% upside from these prices. And I’m going to show you why you should like this company.”
Meta Growth’s Focus on Recreational Cannabis
Until recently, Meta was known as National Access Cannabis. The name change—which aligns the company’s corporate and retail brands, as well as its META ticker—reflects its intention to become “the preeminent cannabis retailer in Canada.”
As part of its re-branding, Meta sold its portfolio of medical pot clinics. This not only allows it to focus on its recreational portfolio, it also generated $4 million in cash. These funds will be used to fund the build-out of Meta’s recreational retail locations.
Meta Growth CEO Mark Goliger said:
“As the industry has evolved, our focus has shifted from medicinal to recreational [pot], and today, retail is our portfolio and our future. Brand recognition and consistency are key to our success and Meta is ready to continue to maintain our leadership position in the Canadian retail market.”
Divesting from medicinal cannabis to better focus on recreational marijuana is a wise choice. Canadians will reportedly spend $5.2 billion on cannabis by the year 2024. Of that amount, 92%—or roughly $4.8 billion—will go towards the recreational sector.
Meta Growth’s Leading Retail Revenue
In the first year since legalization, Meta raised over $60 million in retail sales at a cumulative gross margin of 32%. Ultimately, the company’s adjusted EBITDA came out to $2.3 million.
Nearly $17 million of that revenue was made in Q3 2019. According to New Cannabis Ventures, that represents year-over-year growth of 3,121%.
Through a combination of its revenue and the funds generated from the sale of its medical portfolio, Meta Growth is expanding its retail footprint across Canada.
The company currently has 35 licensed stores in the country, and plans to have 40 stores operating by the end of 2019. By the end of 2020, it expects to have between 95 and 110 retail locations. The company also has a clear roadmap for improving the average revenue it generates per store. This will, in turn, increase the company’s gross margin.
Currently, Meta is only operating in Alberta, Saskatchewan, and Manitoba. It is currently working on opening dispensaries in BC and Ontario, with more provinces to come.
“I believe with all these locations opening up in 2020, Meta is in a position to get into a positive cash flow situation and to eliminate its debt,” says Rich. “It will build shareholder equity for shareholders who want to get in at these prices.”
What do you think? Is META the right play for recreational cannabis? Let us know your take.
For more of Rich’s cannabis profiles, check out this article about Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB).
Featured image: DepositPhotos © karnauhov