Gage Growth Corp. Impressing Both Consumers and Analysts

Gage Growth Corp. (CSE: GAGE) (OTC: GAEGF) went public in early April 2021, and with a month or two under its pubco belt analysts are taking a closer look at the company. Meanwhile, Gage’s focus on the high growth Michigan legal cannabis market, premium brands covering a wide range of product types, and a clean inviting retail setting is paying dividends with consumers. It’s a good time to take a look at Gage and see what is happening.

Analyst Coverage

Intro-Act is an advisory firm that utilizes machine learning and artificial intelligence to facilitate and maximize the information flow between institutional investors and public companies. It was founded by capital markets and research veterans. Intro-Act recently put out a research report on Gage Growth Corp., offering insight into the company’s strengths and comparing it to other public company peers.

Meanwhile, Viridian Capital Advisors has been covering and advising the cannabis industry since 2014 and is considered a pioneer in the sector. The firm brings years and years of capital markets experience to bear on the relatively new legal cannabis market. Viridian recently published an equity research report on Gage, and it’s an interesting read.

Last, but not least, we have Eight Capital and Haywood Securities initiating research coverage on Gage. Both are reputable investment banks that have played an active role in the cannabis capital markets. Check out Eight Capital’s research report and Haywood Securities’ research report.

We won’t recap the whole reports here as we trust the reader will dive in on their own, but some highlights should be mentioned. Of note is Gage’s expansion plan, as the company is targeting 20 retail locations across the state by year-end (currently operating 9 stores). Gage says the company’s growth initiatives are fully funded while pointing to the use of contract growers to increase production without capital expenditures.

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Michigan’s April cannabis sales when extrapolated over a year equal $1.85 billion. That figure lands the state in the top 3 in terms of total sales and would represent an approximately 87% increase over the $984 million figure from 2020. It’s a big, fast-growing market. As of April, Gage holds a market share of just over 5% in Michigan with goal of capturing 10%+ by year-end. With expansion and growth projected over the coming quarters, that market share figure is expected to rise.

Intro-Act assigns an intrinsic value to the company of about $990 million based on comparisons to competitors in the space. The other three reports offer buy ratings with price targets ranging from C$4.25 up to C$6.50. As of this writing, Gage stock is trading in the neighborhood of C$2.60.

Consumer Response

Gage is committed to high-quality products, whether created in-house or by its lineup of exclusive premium partners, including Cookies, Blue River, Lemonnade, and SLANG Worldwide. Gage brands employ small-batch, hydroponically grown, handpicked cannabis flowers that are carefully dried, trimmed, and cured using the company’s proprietary methods. Michigan consumers have taken notice.

On top of the above-noted 5%+ market share, each Gage store performs very well in terms of average purchase per customer. In 2020, Michigan consumers averaged $85 per visit to a cannabis store. Gage customers nearly doubled that number with an average basket size of $164 across the company’s stores.

Overall, Gage targets revenues of $1 million per month for each of its stores. The company has been hitting that mark, and in March 2021 actually reported sales of $1.3 million per store. Gage anticipates having 20 stores open by the end of 2021 and another 10 locations the following year. If consumer response remains as positive as it has been, Intro-Act projects an approximately 15% market share in Michigan by the end of 2022.

The Upshot

Gage recently announced its inclusion in the AdvisorShares Pure US Cannabis ETF (NYSEARCA: MSOS). The ETF focuses on US cannabis and hemp companies, with nearly $1 billion of assets under management. Inclusion in the ETF creates more exposure for the company and offers validation of its business model and growth potential. Investors looking for regionally dominant companies in high-growth markets may want to keep an eye on Gage Growth Corp. Consumers, analysts, and the capital markets have definitely taken notice, and it’s a story that bears watching.

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Disclaimer

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This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.