Gage Growth Corp

Gage Growth Corp (TSX: GAGE) is engaged in providing branding and crucial support services to affiliated licensed operators that produce, distribute, and sell cannabis and cannabis-related products in the State of Michigan.

Key highlights

• In Q2 2021, the company witnessed record revenue of USD 26.4 million, an increase of 130.2% on YoY basis and 49.9% on QoQ basis.
• Gross margins increased by 810 basis points to 34.2% compared to 26.1% in Q1 2021.
• The average selling price for the month of July was of approximately USD 5,100/lb vs. Michigan average of USD 3,500/lb. The company earned premium of 46%, which is a key positive.
• The Company expects to operate in-house processing asset in the fourth quarter of 2021, which could lead to further margin expansion.
• Recently, the company secured new multiple licensing partnerships with premium West Coast brands, including Pure Beauty and Wiz Khalifa’s Khalifa Kush.

Sock conclusion

The business had a solid performance across all financial and operating indicators in the second quarter of 2021, and it will continue to execute on its growth strategy in 2021. However, since the company was just recently listed and has minimal financial data, we're interested to see how the future results turn out. In terms of value, the stock is available at an NTM EV/SALES multiple of 0.79x, which is higher than the industry average of 0.76x. As a result, at the closing price of CAD 2.28 on August 27, 2021, we prefer to stay on the sidelines and suggest a "Watch" rating on the stock.

One-Year Technical Price Chart (as on August 27, 2021). Analysis by Kalkine Group 

Chemesis International

Chemesis International (TSX: CSI) is a Canada-based company, which operates in cannabis products. The company operates in four business segments namely Canada - Corporate, United States - California, United States - Puerto Rico, and Colombia.

Key Highlights:

• The company is yet to report a stable topline and posted constant surge in input costs, which remains as a major concern. Moreover, the company reported higher accumulated deficit during the last few quarters, which is dampening the financial flexibility of the firm.
• The stock of CSI tumbled ~68% and ~76% in the last three months and six months respectively and closed below its 50-days and 100-days simple moving average (SMA) of CAD 0.37 and CAD 0.52, respectively, indicting a bearish price movement.

Source: REFINITIV, Analysis by Kalkine Group

• The group reported liquidity crunch and is unable to meet its meet its financial obligations as they fall due, due to negative working capital.
  

Stock Recommendation:

Despite several business collaborations, the company is yet to report a meaningful update which would support the company’s operations. Operating expenses has increased over the years, which has dampened the overall financial health of the firm. Due to the constant financial losses and no assurance on the upcoming funding, we prefer to remain on the sidelines. Hence, considering the aforesaid facts, we give an ‘Avoid’ rating on the stock of CSI at the last closing price of CAD 0.21 on August 27, 2021.

Planet Ventures Inc.

Planet Ventures Inc. (TSXV: PXI) is an investment company, which invests in a portfolio of shares and other securities of public and private companies. The group invests in the mining, cryptocurrency, and blockchain arena in addition to its most recent investment in a legal web-based sportsbook.

Key Updates:

• The stock of PXI ~31% and ~63% in the last three months and six months, respectively and closed below its long-term support levels of 200-days and 100-days simple moving average (SMA) of CAD 0.317 and CAD 0.229, respectively. The above indicates further price correction.

Source: REFINITIV, Analysis by Kalkine Group

• The company is yet to report a stable income from its operations and reported constant losses in the recent past. The above also led to higher accumulated deficit, damping the overall flexibility.

• In the recent past, the company closed a private placement of CAD 911,250.00 which would be used for the general corporate purposes, indicates poor capital management. Hence, due to the lack of income generation, the company might witness a liquidity crunch in the coming days.
  

Stock Recommendation:

The operation of the company is investing in disruptive industries like eSports and competitive video gaming, and the acceptability is yet unknown to the market. Moreover, entry of new players in the market with better offerings would lead to price competition and loss of market share. Hence, considering the aforesaid facts, we give an ‘Avoid’ rating on the stock of PXI at the last traded price of CAD 0.15 on August 27, 2021.

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.