Charlotte’s Web Holdings Inc: Will This Send the $5 Pot Stock Soaring?

A Pot Stock to Think About

If you are looking for a low-priced pot stock that has serious upside potential, Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF, TSE:CWEB) should be on your radar.

Headquartered in Boulder, Colorado, Charlotte’s Web is a producer and distributor of hemp-derived cannabidiol (CBD) wellness products. The company has an expanded product portfolio that includes CBD oil tinctures, CBD capsules, CBD topicals, and CBD pet products.

Charlotte’s Web stock went public on the Canadian Securities Exchange on August 30, 2018 and got uplisted to the Toronto Stock Exchange on May 31, 2019.

Even though these are both Canadian stock exchanges, the company’s operations are based in the United States. Charlotte’s Web Holdings Inc operates farms in Colorado and has contract farms in Kentucky and Oregon.

And because the company’s stock also trades over the counter in the U.S. under the symbol “CWBHF,” it’s quite easy for American investors to buy and sell its shares.

At the time of this writing, CWBHF stock trades at less than $5.00 apiece. While the company’s nominal share price seems a bit low, it is actually one of the biggest players in the hemp-derived CBD business.

According to Charlotte’s Web’s latest investor presentation, the company’s products are now sold in more than 9,000 retail locations. (Source: “Building a Global CPG Company,” Charlotte’s Web Holdings Inc, last accessed March 9, 2020.)

Charlotte’s Web Holdings Inc Announces Some Impressive Numbers

Charlotte’s Web recently released its 2019 hemp harvest results, which could become a catalyst for Charlotte’s Web stock.

In 2019, the company harvested 2.3 million pounds of total dried biomass, representing a whopping 245% increase year-over-year. At the same time, it saw a 10% increase in yield per acre and a 22% increase in CBD potency. (Source: “Charlotte’s Web 2019 Harvest Delivers 10% Increase in Yield and 22% Increase in CBD Potency due to Proprietary Genetics,” Charlotte’s Web Holdings Inc, March 4, 2020.)

It is estimated that 36,000 kilograms (79,366 pounds) of CBD were harvested during the year, with a 33% reduction in cost per milligram.

“We are very pleased with the results of the 2019 harvest, achieving yield and potency levels that surpassed our expectations. This reflects the tremendous expertise we have gained in hemp cultivation over the last six years,” said Chief Executive Officer Deanie Elsner. (Source: Ibid.)

“More than half of our harvest was certified organic in 2019 with the remaining acres in transition.  We are well on our way to becoming one of the largest providers of certified organic hemp CBD extract in the country.”

If you look further back, you’ll see that the company was already growing its business at a commendable pace. In 2016, Charlotte’s Web Holdings Inc generated $14.7 million of revenue. The figure rose to $40.0 million in 2017 and $69.5 million in 2018.

Mind you, the top-line number is not the only thing that the company has improved over the years. In 2016, Charlotte’s Web earned a gross profit of $9.6 million. In 2017, the amount surged to $29.9 million. And by 2018, the company was earning $52.3 million in annual gross profit.

While Charlotte’s Web is yet to report its fourth-quarter and full-year 2019 results, its third-quarter numbers were pretty impressive.

In particular, the company generated $25.1 million of revenue in the third quarter of 2019, which represented an organic consolidated year-over-year growth of 42%. (Source: “Charlotte’s Web Holdings Reports 2019 Q3 Earnings,” Charlotte’s Web Holdings Inc, November 13, 2019.)

Notably, Charlotte’s Web’s business-to-business retail sales surged 66% during the quarter. The company has also been capitalizing on the booming e-commerce industry, earning 51% of its third quarter revenue from e-commerce.

Charlotte’s Web Holdings Inc Revenue Growth ($Millions)

(Source: “Building a Global CPG Company,” Charlotte’s Web Holdings Inc, op. cit.)

Analyst Take

Ultimately, keep in mind that CBD is one of the hottest segments of the legal cannabis market right now. As one of the biggest players in the business, Charlotte’s Web Holdings Inc could deliver some serious returns to its investors.