High Tide Inc: Ignored Pot Stock Up 300% YoY; Reports Record 2020 Results

High Tide Stock Up 180% in 2021; Just Getting Started

It’s tough to find an overlooked, undervalued pot stock these days, but High Tide Inc (CVE:HITI, OTCMKTS:HITIF) fits the bill.

The company’s portfolio includes a dominant presence in Canada’s retail marijuana industry; a global designer, manufacturer, and distributor of marijuana accessories; and a major marijuana accessories e-commerce platform.

I last wrote about High Tide back in September, when HITIF stock was trading at $0.14 per share. Thanks to back-to-back strong financial results, High Tide stock has since soared by 300%. The stock is also up 180% since the start of 2021.

There’s every reason to believe HITIF stock is just getting started.

In addition to opening a number of new retail dispensaries, High Tide Inc reported great 2020 financial results, which included 166% growth in revenue and full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $8.0 million.

Chart courtesy of StockCharts.com

HITIF Stock Overview

High Tide operates a chain of 73 retail cannabis stores in Canada under the “Meta Cannabis Co.,” “CANNA Cabana,” NewLeaf Cannabis,” and “KUSHBAR” banners. This makes High Tide Canada’s largest cannabis retail network by revenue, and one of the largest by store count. (Source: “Fact Sheet March 2021,” High Tide Inc, last accessed March 9, 2021.)

The company is actively focused on growing its presence in Ontario, the most populous province in the country. By the end of fiscal 2021 (ended October 31, 2021), High Tide expects to be operating 115 stores.

High Tide Inc’s Amsterdam-based “Grasscity.com” is the leading online destination for cannabis consumption accessories and lifestyle products. In 2020, the site attracted more than 26 million site visits, 77% from North America.

The company’s site “CBDcity.com,” which was launched in May 2020, is a platform for selling cannabidiol (CBD) products.

Through “Valiant Distribution,” High Tide Inc designs, manufactures, and distributes marijuana lifestyle products and consumption accessories. It has distribution facilities in Calgary, AB and Las Vegas, NV.

Of the more than 5,000 stock-keeping units (SKUs), 75% of the Valiant Distribution’s catalog is manufactured in-house, allowing it to maximize margins. Valiant has partnered with celebrity brands including Snoop Dogg, Paramount Pictures, Hellboy, and Guns N’ Roses.

Plans to Uplist to the Nasdaq

Last December, High Tide announced that it had submitted an initial application to list on the Nasdaq. Management said uplisting to the Nasdaq would enhance the company’s investor profile and shareholder value. (Source: “High Tide Announces Application to List on Nasdaq,” High Tide Inc, December 9, 2020.)

The initiative allows High Tide to accelerate its business strategy focused on the U.S. by attracting institutional and retail investors, as well as merger-and-acquisition opportunities.

High Tide already earns approximately 23% of its revenue in the U.S, and it’s looking to expand its footprint in the U.S in businesses that complement the company’s business divisions.

Strong Fourth-Quarter & Fiscal 2020 Results

On March 1, High Tide announced its financial results for the fourth quarter and fiscal year ended October 31, 2000.

For fiscal year 2020, High Tide’s revenue increased 118% year-over-year to CA$83.3 million. Its gross profit increased 172% to CA$30.8 million. (Source: “High Tide Reports 2020 Financial Results Featuring a 166% Increase in Revenue and Record Adjusted EBITDA of $8.0 Million,” High Tide Inc, March 1, 2021.)

The company reported a full-year net loss of CA$6.3 million (CA$0.03 per share), a significant improvement over its 2019 net loss of CA$26.2 million (CA$0.13 per share).

High Tide Inc’s 2020 adjusted EBITDA was roughly CA$8.0 million, compared to its 2019 adjusted EBITDA loss of CA$16.2 million.

The company’s fourth-quarter revenue increased 118% year-over-year to CA$24.87 million while its gross profit increased 112% to CA$8.7 million.

High Tide reported a fourth-quarter 2020 net loss of CA$1.3 million (CA$0.01 per share). For the fourth quarter of 2019, the company reported a net loss of CA$15.4 million (CA$0.07 per share).

High Tide Inc ended the fourth quarter with cash on hand totaling CA$7.5 million. Its cash balance has increased significantly since then, to approximately CA$38.0 million.

“We continued to run our operations tightly, ending the year off with the record levels of revenue and Adjusted EBITDA,” said Raj Grover, president and CEO. (Source: Ibid.)

“We are excited about our trajectory in the United States and continue to prioritize and look for opportunities in that market.”

Analyst Take

There’s a lot to love about High Tide Inc. The company is expanding its retail footprint, and it’s already the largest legal marijuana retailer in Canada by revenue. The company has also improved its balance sheet through several transactions.

Despite the global slump in retail sales, High Tide closed the year with healthy adjusted EBITDA, making 2020 the best year in the company’s history. Looking ahead, its first-quarter revenue is projected to be in the range of CA$37.0 to $CA38.0 million, compared to CA$13,659 in the same period last year.

That bodes well for High Tide stock.