Popularity Stock Play on Cannabis Concentrates

Cannabis Oils

Cannabis concentrates is the fastest growing cannabis subsector. That’s what leading cannabis research firm Arcview Research says in a recent report published with BDS Analytics.

Arcview projected that cannabis concentrate sales would grow 49% in the second half of 2018, reaching $3 billion for the year. Looking forward, Arcview predicts that annual concentrate sales will hit $8.4 billion by 2022, more than doubling in the next four years.

Investors can cash in on the growing popularity of concentrates with a new cannabis IPO that just started trading on the NASDAQ. This early industry leader:

  • Is one of the largest wholesalers of cannabis vaporizers and supplies in North America.
  • Just went public on the NASDAQ in a $650 million IPO.
  • Grew revenue by 102% in 2018.
  • Is expanding into international markets.
  • Looks like one of the most undervalued stocks in the US cannabis sector.

Greenlane Holdings (NASDAQ: GNLN) is one of the largest wholesalers of vaporizers and vape supplies and accessories in the US. Headquartered in Boca Raton, Florida, Greenlane has been in business since 2005, employs more than 200 people, and has a market cap of more than $650 million.

Greenlane currently operates six distribution centers across the US, supplying more than 10,000 retailers, cannabis dispensaries and vape shops. Greenlane sells a wide range of good, offering more than 5,000 products ranging from simple rolling papers to high-tech vaporizers.

Greenlane also sells its catalog of products online through two stores: VaporNation and VapeWorld, shipping more than 440,000 packages in 2018.

*Image from Greenlane website.

Bottom line? Greenlane is a vaporizer superstore.

Looking forward, I see four key triggers that tell me this company and share price will continue growing.

#1 – Greenlane Is a Rare Us Cannabis Stock Trading on the Nasdaq

Most US cannabis companies that have gone public in the last few years have been forced to issue shares on the Canadian Securities Exchange because of legal restrictions in the US. While this is proving to be a pretty solid workaround for US cannabis companies looking to access large amounts of capital, it has prevented them from accessing large groups of US investors. Greenlane has been able to sidestep this obstacle.

Shares went public on the US-based NASDAQ because of a legal loophole. Greenlane does not grow or sell cannabis, which makes its business federally legal. That listing on the NASDAQ is an important win for Greenlane. It gives the company additional credibility and access to millions of potential investors that it wouldn’t have access to if it was listed in Canada.

#2 – Greenlane Is Experiencing Explosive Revenue Growth

Greenlane is cashing in on the explosive growth of the US vaporizer market. Revenue in 2018 increased by 102% from 2017 to $179 million.  First-quarter sales from the period ended March 31, 2018, jumped 15% from the same period last year. Greenlane is on pace to generate more than $200 million in sales in 2019 – that would make it one of the highest revenue cannabis companies in the industry.

#3 – Greenlane Is Expanding into International Markets

Greenlane is in the early stages of expanding into international markets. It has established operations in Amsterdam and London with plans to expand into Australia and Columbia.

#4 – Greenland Shares Look Undervalued

With sales booming, Greenlane looks like one of the most undervalued stocks in the cannabis sector. Its price-to-sales ratio of 4 is a huge discount to many of its peers. For example, Medmen Enterprises (MMNFF) has a P/S ratio of 14.

Shares Are Trading Low on the Chart

Shares of Greenlane began trading on the US-based NASDAQ exchange on April 18. Shares have been volatile since hitting the exchange, first surging and the falling. As it stands, shares are about even. I view this recent dip as a great opportunity to buy low.

The Big Picture on Greenland’s IPO

As you can see, Greenlane is no Johnny-come-lately cannabis company – it’s one of the largest vaporizer and vape supply wholesalers in the US, it has been in business for 14 years, and it’s an early industry leader with a valuation quickly approaching $1 billion. I expect big things from Greenlane with the vape industry ranking as one of the fastest-growing cannabis subindustries.

About the Author

Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.