Why invest in High Tide $HITI ?

Discussion in 'Penny Stocks' started by Joseph G, Feb 6, 2021.

  1. Joseph G

    Joseph G New Member

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    Because it's a profitable company, with a diversified portfolio being managed by a talented, aggressive and reliable CEO who himself owns 23% of all shares in the company that he founded back in 2009

    It's a retail based company, with international exposure, that does good business without dealing with the risks and expenses facing licensed producers

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    But can they even make money if they don't grow cannabis? Absolutely; in fact HITI enjoys the highest revenues in the Canadian retail sector and fifth highest revenues in the entire Canadian cannabis sector beating the likes of Hexo Corp and Organigram - the two having market caps 3.6 times and 2.7 times larger than HITI's respectively

    .

    But you don't judge a company solely based on the valuation of its competitors; you look at fundamentals. And that's where High Tide shines brightest

    First we've got the sources of income;

    • Biggest earners are the brick and mortar stores Canna Cabana, META, KushBar and NewLeaf Cannabis. 69 stores open as of today, with a goal of 110-120 stores by EoY

    • Valiant Distribution - The backbone of High Tide's vertical integration strategy, acting as a global manufacturer and distributor, with numerous celebrity-licensed products. Catalog consists of 5,000 products of which 75% are manufactured by High Tide

    • Famous Brandz - The Hollywood division of High Tide. Partnerships with amongst others Snoop Dogg, Paramount Pictures and Cheech & Chong

    • Grasscity (US) - the worlds largest online accessory shop, a favorite in the U.S. with growing customer base in Europe. Shop receives 23 millions visitors yearly, with 130,000 orders (2020)

    • CBDCity (US) - a wellness shop supplying its clients with all their CBD needs

    • Smoke Cartel (US) - Second largest online head-shop with 7 million visitors and 110,000 orders. Most notable regarding Smoke Cartel is their proprietary Drop-shipping technology which will be integrated across all of HITI's e-commerce platforms. Furthermore Smoke Cartel gives High Tide exposure to the Mexican market. The acquisition of Smoke Cartel will be finalized in March 2021
    With the legalization/decriminalization of Cannabis in the U.S. on a federal level High Tide will reliably further expand its footprint in the U.S.

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    Bullish indicators



    • High volume in spite of low attention from main stream channels

    • Average volume 10.8 million as of 02/05/21 (HITI.V : 5M / HITIF : 5.6M / 2LY.F 0.23M)

    • The acquisition of META Growth saves High Tide $9 million in synergies

    • Financed for aggressive (further) expansion

    • Legalization in U.S.

    • Undervalued by all metrics

    • Cannabis consumption increasing QoQ in Canada/U.S. on its way to beating alcohol

    • Cannabis sales breaking records in spite of Covid-19 restrictions

    • Black market competition shrinking QoQ


    Catalysts as stated by CEO Raj Grover (14/01/21)

    • Ontario lifting cap on number of licenses

    • More provinces allowing for a change in the distribution model to allow retailers buying products directly from licensed producers

    • Ontario and other provinces making deliveries permanent

    • End of OCS monopoly
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    As previously stated High Tide is a top earner in the sector; the specifics are stated below

    Keep in mind some of these numbers are outdated as last ER released was for 20Q3. While other numbers are up to date as we've been given a sneak-peek preview to the unreleased Q4 numbers

    Furthermore High Tide merged with a competitor, of roughly equal size (Meta Growth), back in November long after the release of Q3 report, so the upcoming Q4 and Q1 reports (both expected March 2021) will include numbers from both companies and will be vastly improved over some of the outdated numbers stated below

    • $148M annualized revenue (Q4)

    • $37M quarterly revenue (Q4) (rev. increasing QoQ due to opening of new stores, increased number of customers and acquisitions such as Smoke Cartel)

    • Impressive 38% margins (Q4)

    • +$5.3M positive EBITDA (Q4)

    • +$0.02 EPS (Q3)

    • +$2.1M in adjusted operating income (Q3)

    • $25 million cash on hand (2021)

    • 50% of recurring customers are club-members (57,000 members as of Q3)

    • Recently restructured $10.8M in debt into interest-free debentures due 2025

    • Warrants exercise price/date $0.35 February 2023

    • $2M debt due Sept 2021 in consideration for warrants

    • 180% YoY growth (Q3)

    • Fair value $4.80 (2021)

    • Smoke Cartel : Annual rev. $7.4M USD, 16% EBITDA, $1M USD cash on hand (2020)

    • Both Aurora Cannabis and Aphria heavily invested in High Tide

    • Offices in Calgary, Nevada, Amsterdam (2021)

    • 600 employees (2021)
    .

    From Investor presentation (updated late January 2021)

    • Potential Shares from Stock Options : 124,843,280 (Exercise price of $0.50 per share)

    • Potential Shares from Exercise of Warrants : 157,133,157 (Weighted average exercise price of $0.42 per share)

    • Potential Shares from Conversion of Unsecured Debentures 363,160,439 (Weighted average exercise price of $0.30 per share)

    • Potential Shares from Conversion of Secured Debentures : 425,429,411 (Exercise price of $0.425 per share)

    • Potential Shares from Conversion of Secured Convertible Loan : 5106,363,636 (Exercise price of $0.22 per share)
    .



    High Tide was virtually unknown until very recently. In spite of becoming the first profitable retailer, merging with META, uplisting to TSXV, applying to Nasdaq, acquiring Smoke Cartel and raising $20M from institutional investors all in quick succession it's still flying below the radar

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    https://stocktwits.com/symbol/HITIF

    https://ca.finance.yahoo.com/quote/HITI.V/community?p=HITI.V&.tsrc=fin-srch

    https://ceo.ca/hiti

    https://hightideinc.com/wp-content/uploads/2021/01/High-Tide-Investor-Presentation-2021-01-18.pdf

    https://www.newcannabisventures.com/cannabis-company-revenue-ranking/
     
  2. Joseph G

    Joseph G New Member

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    I sincerely hope at least on of you all took my advice
     
  3. Joseph G

    Joseph G New Member

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    Check out pre-market. Still time to get in
     

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