Major Canadian cannabis stocks were unexpected. Aurora Cannabis (WKN: A12GS7) was a terrible start in its 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 storm of hemp that has survived. This year's stock surpasses Aurora, Canopy and almost all other cannabis stocks.
So what's that? Home of origin (SIN: A2DH0P). Shares were traded on the Canadian Exchange (CSE) on October 22nd and the OTC on the US market. Only Origin House is not brand new.
Under the new flag
Origin House was still known as CannaRoyalty by the end of last week. What happens after a name change? Well, the company wanted a new corporate identity, which clearly showed the goal of becoming "an excellent brand of the world of cannabis".
CannaRoyalty is called the origin of the company. The actual business model was aimed at streamlining the authors of cannabis, where the company financed the marijuana companies in exchange for crop production or engagement. But the strategy of the company changed over time.
The original house is now mainly focused on the distribution of cannabis products in California. The US state is the largest legal marijuana market in the world. And Origin House is the # 1 Californian hemp market.
Currently, the company has more than 50 brand partners. It sells over 130 cannabis branded products to approximately 70% of California's retail outlets. Origin House owns and markets several distinct brands.
But while Origin House is the biggest player on the big California market, Canada has crossed the door. In September, the company announced that it will purchase 180 smoke, a leading Vape merchant with 26 stores and a strong online presence.
New name, new logo and new stock market binder: Origin House is looking forward to good times. Mark Lustigs, General Manager, said that California's first half in 2018 was a bit complicated because of the rehabilitation of a state-regulated cannabis market. But now Lustig finds the situation "quite great".
He was convinced that Origin House would be profitable in 2019. Technically, the company earned profits in the second quarter. However, the positive result was determined by the profit from the sale of assets. But Origin House now seems to be well on its way to sustainable profitability.
At least one analyst thinks that Origin House will generate nearly $ 200 million in next year and $ 425 million by 2020 – about $ 325 million. Origin House has not yet provided sales forecasts, but estimates by the analyst should be viable.
Lustig said that at the moment the company produces about 70% of sales with sales and 30% with their brands. His goal is to change the revenue by almost 50:50 by the beginning of 2019. Origin House plans to achieve this by launching a new brand each month.
This is part of the Origin House's three-phase long-term strategy. First of all, they want to expand the base as a leading cannabis seller in California. The second phase is to use the data derived from their sales activities to further accelerate – build more successful brands and promote existing brands on the California market.
The three stages of the home-building strategy could be repaid in the long run. The company plans to repeat its success in California in other fast-growing markets as well. An example of this strategy is the purchase of 180 Smoke. Lustig has suggested that Origin House could expand in the neighboring states of the United States of America in the future of Nevada. He is committed that the company will develop disciplined, rather than enter into new markets, first providing a solid foundation.
Better than big players?
As I said, Origin House easily outperforms the stock results for most other cannabis stocks, including two of the largest: Canopy and Aurora. But the Origin House as a long-term investment is better than big industry players? I think so.
Beacon Securities believes distributors and retailers could become brands of cannabis. I agree, especially with regard to the US market. The house of origin is in good condition to complement its brands in addition to branded partners.
Canopy Growth, Aurora Cannabis and others are hand-related when it comes to working in the United States. But not at Origin House. It should be remembered that the United States accounts for 85% of the global cannabis market. Even if Canada has a recently launched market for legalized cannabis market and money laundered elsewhere, by 2022, the United States will still account for almost three quarters of cannabis sales.
Then there is an assessment. Even after the recent sharp falls, Canopy's market capitalization is close to $ 8 billion, while Aurora's market capitalization is close to $ 7 billion. The market capitalization of the home building is close to the mark of 300 million dollars. By 2020, with a revenue potential of $ 250 million, stock valuation, based on its realistic growth potential, looks very attractive in the short term. You can not say that for large cannabis stocks.
In August, I said that CannaRoyalty was the best, somewhat unknown, cannabis stock. But this is no longer true – now this honor is Origin House.
3 largest stocks of multi-billion megatrends in marijuana
Several cannabis companies have already increased by three digits. Find out in this special report, the 3 largest stocks of multibillion dollars in marijuana marijuana, why marijuana develops in the new multi-billionth megacity … and why more and more rays of investors now climbed to the rival. Read the full knowledge of this report by Motley Fool Specialist! Click here for free access.
Motley Fool recommends the promotion of Origin House. Keith Speights does not belong to any of the inventories listed.
This article was released on October 28, 2015 at Fool.com. It has been translated so that our German readers can participate in the discussion.