The Case for Holding Sundial Growers Stock Through the Earnings Report

1 year ago 246

I proceed to basal by Canadian cannabis institution Sundial Growers (NASDAQ:SNDL), but I admit it’s been getting tougher to support my position. SNDL banal has continued to decline, providing ammunition to critics.

Low-priced cannabis stocks are speculative. There’s hazard progressive with an concern successful Sundial Growers, and this volition stay existent for the foreseeable future.

That being said, I’m going to support the thought of holding your SNDL banal shares done heavy and thin.

I’d adjacent see holding them done the upcoming net event – which could beryllium terrific, disastrous oregon nary of the above.

A Closer Look astatine SNDL Stock

If we were to compile a database of 2021’s astir fashionable “meme stocks” targeted by Reddit and Robinhood traders, SNDL banal would astir apt person a spot connected that list.

Short-squeeze speculation was astir apt a contributing origin arsenic Sundial shares rocketed from 56 cents successful precocious January, to a 52-week precocious terms of $3.96 printed connected Feb. 10.

In hindsight, it’s casual to reason that SNDL banal went excessively high, excessively fast. By mid-April, the banal was beneath $1 again and I considered it a bargain.

If the shares were a bargain successful mid-April, past they’re extra-cheap now. On the day of May 3, the banal had declined each the mode down to 83 cents.

In reality, the SNDL banal bulls don’t request to trust connected Reddit-fueled hype. Nor bash they person to suffer their chill conscionable due to the fact that an net lawsuit is coming up soon.

Cultivating a Cannabis Giant

Here’s wherever radical thin to get confused. Some folks presume that due to the fact that the stock terms is low, Sundial indispensable beryllium a non-entity successful the cannabis cultivation space.

That’s wholly not true. I invitation anyone to cautiously work done Sundial’s investor presentation and inactive disregard the institution arsenic a lesser competitor. You’ve astir apt heard different companies boast astir having “mega-factories” and “giga-factories.” Well, Sundial Growers has a giga-factory of its own.

I’m referring to the company’s 448,000-square-foot, purpose-built indoor cannabis cultivation facility. In what mightiness beryllium considered an innovative process, Sundial Growers uses modular, small-batch turn rooms to cultivate the cannabis.

The institution points retired that galore of its peers successful the manufacture are moving distant from interior cultivation. Instead, they’re relying connected micro-growers and the wholesale spot market.

I truly similar Sundial’s hands-on attack to cannabis cultivation. This allows for much implicit vertical integration – which means greater power implicit the cannabis production.

Loving the Low Expectations

Impressively, Sundial harvested an estimated 60 cardinal grams of cannabis merchandise past year.

It’s just to reason that the company’s giga-factory is moving smoothly and providing worth for clients and stakeholders.

And yet, the marketplace has beaten down SNDL banal arsenic if the institution lacks value. That’s a shame – oregon an opportunity, depending connected however you take to look astatine the situation.

This is simply a institution that successfully “restructured the full enactment by repaying each outstanding debt” successful 2020, arsenic reported by Sundial CEO Zach George.

Somehow, this accomplishment (which not each cannabis companies person achieved) hasn’t truly been appreciated by the concern community. Think astir it: successful 2020, the institution eliminated $227 cardinal successful its aggregate main magnitude of debt. Plus, Sundial Growers managed to accumulate $719 cardinal successful unrestricted currency connected manus arsenic of March 15, 2021.

So, the institution is successful a beardown superior position. As Sundial heads into its first-quarter 2021 net release, investors should brace for affirmative results, adjacent if expectations are muted.

SNDL Stock: The Bottom Line

When the investing assemblage doesn’t expect much, that’s not needfully a atrocious thing.

There are reasons to judge that Sundial Growers is simply a cannabis-market elephantine successful the making.

Therefore, SNDL banal could precise good beryllium a inexpensive summons to pot-stock wealth, and shares mightiness go much costly aft the upcoming information readout.

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