Exciting news for our top undervalued cannabis stock pick of 2021! Today, SpeakEasy received an amendment to sales licence from Health Canada.
This is a huge win and a major milestone for SpeakEasy as it allows the company to sell extracts, concentrates edibles and topicals into the recreational market and also directly to medical patients.
This may be the last time you see SpeakEasy at the $0.51 mark… so let’s dive into why SpeakEasy has the potential to be the next major licensed producer.
1. The extracts market is one of the fastest growing product categories in the Canadian cannabis market. In the 2020 January-March period, the extracts products made up 7.4% of sales. By the end of the fourth quarter, they increased to 14.9%.
2. SpeakEasy is set to release consumer facing brands this year. Remember how this company has a gross margin of 74% on a $10M B-to-B sales contract? That margin is only set to increase when SpeakEasy sells directly to the consumer.
3. SpeakEasy is set to produce 2,225 KG of high quality extracts… and those kilos have a pretty price tag of $115 MILLION when sold in retail stores across Canada.
Okay let’s dive into that last point. Hypothetically lets take that $115,000,000 and split it up over 4 quarters. That’s $28.5M. Stay with me.
Let’s run some comps:
Hexo: $3.03 CAD per share.
Market Cap: $610M
2021 Q3 Revenue: $22.66M
and
Origanigram: $3.29
Market Cap: $982M
2021 Q3 Revenue: $20.34M
Do those valuations make sense to you? To us they don’t.
Is SpeakEasy severely undervalued at $0.51 and a $66M market cap? YES!
Does SpeakEasy have the potential to be Canada’s next major licence producer? YES!
Oh and if you missed it, this year SpeakEasy is anticipating to double the yield of 2020 – 140,000 KG.
When SpeakEasy goes to market with their consumer facing brands, they will be able to undercut anyone in the industry.
This is the one you’ve been waiting for. We don’t see a better opportunity after today.
– Author Opinion
SPEAKEASY CANNABIS CLUB
SpeakEasy Cannabis is once again delivering an exciting set of news.
This time the company has just announced that they have maxed out their production capacity and have sold out of inventory of pre-rolls, extracts, and craft indoor flower for the foreseeable future.
IT’S ALL ABOUT THE MARGIN
In April, SpeakEasy hit a major milestone when it announced a $10M B2B sales contract with a staggering margin of 74%. Read that again.
It’s safe to assume that the margins are staying consistent. SpeakEasy never focused on it’s square footage for valuation, and now with “no fat to trim” so to say, they’re reaping the rewards.
Drawing a quick comparison to Canopy, Canada’s biggest cannabis producer, which generates a 5.44% margin on sales[1] and is has a C$15B market cap – Speakeasy’s current C$70M market cap with 74% margin on sales is grotesque even in the most conservative of scenarios.
So the question is – could this undervalued cannabis stock become the largest Licenced Producer in the world?
With outdoor cost of $0.04 cents per gram, and 150,000KG expected harvest for 2021. We’ll let you draw your own conclusions.
“[Product sold out] It’s a great problem to have and is a testament to our foundational beliefs, providing high quality products at reasonable prices will attract and keep customers.”
– Founder, Marc Geen
QUADRUPLING PRODUCTION CAPACITY
SpeakEasy’s production team isn’t slowing down. The extractions lab is running triple shifts, 7 days a week to keep up with demand.
Thats the good news. The better news is that new equipment is on the way and this additional extraction line is set to quadruple the extracts output.
SpeakEasy is expecting to enter multiple provinces in the near future, a move that allows the company to vastly increase in sales.
Things are heating up at SpeakEasy, and the window of opportunity is closing. At $0.58 this stock is severely undervalued.
SPEAKEASY CANNABIS CLUB
LARGEST CANNABIS HARVEST IN 2020 SET TO DOUBLE FOR 2021 MAKING HISTORY ONCE AGAIN
SpeakEasy Cannabis has just announced that they have initiated planting for the 2021 growing season with a goal to achieve 100% increase in yield from last years historical and largest harvest. Thats 140,000 KG of cannabis.
The Company, founded by the Geen family who have been farming in the area for over 120 years, achieved a milestone last year when they harvested the largest outdoor legal cannabis crop in the world weighing a staggering 72,000 KG.
SpeakEasy’s 2020 harvest was so successful it caught the attention of publications like Forbes, CBC, and Global all that drove to the SpeakEasy location (a 6 hour trip from Vancouver).
Watch the latest investor update video featuring the founder, Marc Geen.
SPEAKEASY CANNABIS CLUB
Image : SpeakEasy 2020 outdoor facility (front field).
The company from Rock Creek, Canada, the “Nappa Valley” of Canada, we see the big winner in the cannabis industry, not only in 2021, but also for the next few years.
Because we currently don’t know any other company in the industry where the signs point so much for disproportionately strong growth. Expect Speakeasy to join the ranking of the largest cannabis growers. Speakeasy can obviously do something that others haven’t been able to do before (more on this in a moment).
“The name Speakeasy could soon be used as often and again and again as it does by the world-famous companies such as Aphria, Canopy or Tilray when talking about the major international cannabis companies.”
– Author Opinion
Speakeasy’s stock is still at Pennystock level, one reason why brave investors could, if successful, achieve a portfolio return that is extremely rare. The journalists of the Canadian Broadcasting Corporation (CBC) or Forbes have already noticed.
SPEAKEASY CANNABIS CLUB
HOW IS SPEAKEASY SET TO DISRUPT THE CANNABIS SECTOR?
The legal cannabis industry as a whole has been thriving over the past few years despite the share price of the majority of companies going through a correction. Canada’s legal cannabis sales have doubled in the past year[2] and over 40% of Americans live in states that have fully embraced legalization[3].
So what gives?
Well the truth is that the entire industry is pivoting from being valuated primarily based on operational square footage to what they actually produce and are able to sell – shocking, we know.
Well get this – what If we told you that there is a cannabis producer in Canada, producing 75% of the capacity of the largest cannabis producer in the World with a margin 15x higher than the latter, and a valuation 250x lower?
“For one we would be telling the truth and for two the pot is once again hot, this is your heads up to get in before it starts boiling.”
– Author Opinion
To put things into perspective, the largest cannabis company in the world, Canopy, is worth around C$15bn while producing roughly 200,000kg of cannabis annually.
Enter SpeakEasy Cannabis – this undervalued cannabis stock is looking at producing 150,000kg by the end of 2021 and valued at C$60M. We’re no rocket scientists here but just by doing some simple math we can see that SpeakEasy is a grossly undervalued cannabis company.
And look, we all know the argument of “oh no big institutions will touch it because it only 70 cents” or “oh it’s just a penny stock.” What SpeakEasy is a generational family business built on FARMING experience.
The Geen family (founders of SpeakEasy), has been growing in the region for multiple generations, not years. They tested over 250 varieties of cannabis and picked the best ones – because they know what their customers want.
They don’t have humongous overhead and didn’t have to waste any time pivoting their operations – they just improved their product offering.
So now back to the current valuation – does it make sense? Not to us, so we’re on board to ride this train to the billions.
Image 3: SpeakEasy preparing the planters for the 2020 growing season.
WHY INVEST?
Well, for starters, among the fertile soil and arid climate of Rock Creek in British Columbia’s Okanagan region sits 2.6mn sqft of the best cannabis in the world.
This region is known as the Napa Valley of Canada primarily for its wineries and fruit orchards.
This is where our undervalued cannabis stock is producing their product, in one of the most fertile land parcels in Canada!
After seeing private medical growers pop up, the Company decided to produce cannabis on part of their 2,200 acre ranch, birthing SpeakEasy Cannabis. This Company is growing cannabis in one of the sweetest spots in the World!
Image 4: Marc, Merv, and Pat Geen.
Furthermore, agricultural activity is a legacy in the Geen family. Marc Geen, who currently oversees operations, is a 4th generation farmer from a family which has over 120 years of experience under their belt! He gained plenty of invaluable insights from his father Merv who was a chairman for SunRype.
While every other producer was focusing on output quantity, the Geen family decided to focus on what they knew best: how to grow a quality product that the consumer wants.
“Our goal isn’t to expand indefinitely, we need to expand to fill the size of the market that we can supply and do what the people want.”
– SpeakEasy Founder, Marc Geen
The Company has been around for many decades and understands all the small nuisances associate with farming. As such, they are extremely prepared to tackle any unforeseen circumstances or events!
This is what truly sets this Company apart from competitors! Speakeasy follows a slow and steady strategy which has helped it to stay in the game.
The pandemic has been brutal on the industry with many growers filing for bankruptcy amid shortage of liquidity.
Companies in the space were already facing challenging conditions amid overspending, inventory write-downs on overpriced products, and steep debt repayment plans
This has not been that case with SpeakEasy who has not had any trouble raising capital to fund its operations.
The company recently completed a $4.3mn private placement to finish up the construction of its indoor processing facility!
Image 5: SpeakEasy Outdoor Back Field
ONE OF THE LARGEST HARVESTS IN HISTORY IS VERTICALLY INTEGRATED
SpeakEasy is one of Canada’s largest outdoor cannabis growers with 290 acres of current growth capacity of which they are currently cultivating roughly 60 acres!
Despite that, Speakeasy yields about 72,000 kilograms (biggest outdoor harvest on record in Canada) of product and the family is eventually targeting 140,000 kilograms of annual production.
Read Full CBC Article Here
While a large majority of Licensed Producer’s (“LPs”) rushed to build as much indoor growing space as possible, SpeakEasy stuck to its roots.
Our undervalued cannabis stock pick has ran with a startup cost of roughly 20% as that of indoor greenhouse’s ($10/sqft vs. $50+/sqft) they were able to scale up production relatively quickly!
Investors should understand how such a situation can be leveraged by the company in the future.
Geen tells us that outdoor cultivation has many advantages. Apart from the lower cost of production, there is also a huge reduction in overhead expenses (cost-per-gram of under $.10 vs. $0.90 for indoor cultivation).
He further explains that since there is very little wastage, the company is able to make concentrates and other products at a price that even the black market can’t produce. This cost advantage is what sets this stock out from the rest of the crowd!
The Geen family has been growing in this climate and region for generations. Having tested over 250 different strains, they have been able to pick the top 3 which are a best fit for such climate and have been growing those ever since.
There is no doubt about the experience and capabilities the Geen family possesses. The strong promoter background should help instill massive confidence into retail investors looking to get long in the stock!
EXTRACTIONS LAB AGREEMENT
Another significant milestone the company achieved was its partnership agreement with RC Frontier Labs. Few of the salient features of the agreement are highlighted below:
- RC Frontier Labs brings all equipment necessary to allow SpeakEasy to enter the cannabis concentrate market immediately
- SpeakEasy’s outdoor crop is perfectly suited to create high quality value added products and with its low cost, gives SpeakEasy an advantage in the market
- RC Frontier Labs brings years of experience in the legal extraction market.
- Agreement expected to save the Company significant upfront cost and years of learning
- SpeakEasy has a significant amount of product that was grown at an industry leading low cost, and as such, entering into the value added markets with such a large advantage gives SpeakEasy a leg up on many in the industry
BRANDS INCOMING
Branding, packaging, and pricing have all been established for its current products and it is anticipated SpeakEasy will enter each Province with the most competitive pricing in each market.
Price-point has proven to be a key determining factor on consumer decision making in the cannabis market and with SpeakEasy’s aggressive pricing and availability of the large consistent supply of flower, it is expected to have an impact in every market it enters.
Given SpeakEasy’s low-cost of production and the fact that processing and packaging are all done on site, further reducing costs, the company is in a unique position to be able to maintain a low-cost point to consumers while maintaining a healthy profit margin!
“We are in the enviable position of having a large supply of beautiful, high quality product that is expected to cost less to produce than anyone in the market. Our formula has always been a simple one, give the consumer what they want at a price they can afford, being in high demand is proof that philosophy is sound. We are a couple months away from ramping up our production of indoor flower to over 720 kilograms per month and I am very confident based on the response we’ve seen so far we will continue to be sold out.”
– SpeakEasy Founder, Marc Geen
SUMMARY
To summarize, we believe SpeakEasy is a great play in the cannabis sector! Below we highlight the investment rationale:
- Health Canada Delays – Delays through the Health Canada licensing process have slowed SpeakEasy’s ability to receive their cannabis sales license, but the team has been full force on cultivation infrastructure and it’s now ready to pop
- The Potential Revenue – The projected revenues for the next year are massive. The 2.6mn sqft of outdoor space paired with the craft indoor complex yielded a harvest of 72,000 kg in 2020. Indoor growing capacity expected to be 2,200 pounds/month
- Share Price Today – The company has a share price of only 50 cents and a market cap of 50 million; to date the company has almost raised that much in capital
- The Team – You’re always investing in people. The Geen family has been farming in the BC Okanagan region for over 100 years, their experience in agriculture is nothing short of incredible
- Family Hasn’t Sold a Single Share – Since going public in 2018 not a single family member Marc, Merv, or Pat Geen have sold a single portion of their shares
- Cannabis Sales Growth – The bubble has popped but the Canadian cannabis sector has been steadily increasing in retail sales with no intent of slowing down
In 2018, Canada became the second country in the world, after Uruguay, to formally legalize cannabis and its by-products! However, the North American cannabis industry has nowhere near peaked.
U.S. President-Elect Biden and the Democratic Party are believed to be considerably more cannabis-friendly than the opposition. Federal legalization could be all but an inevitability before his first term is up!
The House of Representatives recently passed a landmark bill decriminalizing cannabis and is now voting on legislation to facilitate clinical cannabis research by establishing a process so that approved scientists may access flowers and other products manufactured in accordance with state-authorized marijuana programs.
This could open up an entirely new market of 300+ million people that the Canadian cannabis industry did not initially have access to. A massive addressable market for our Company!
These actions will in turn provide massive tailwinds for companies such as SpeakEasy and we think this is the one undervalued cannabis stock investors should surely add to their portfolios!
WATCH NOW: A FAMILY FARMING LEGACY
A short film documenting the storied history of the Geen family, the generational farmers who founded the Okanagan based Licenced Producer.
From cherries, apples, ginseng to peaches, and now a Licenced Producer, SpeakEasy Founder, Marc Geen, and his family are pioneers of agriculture with more than a century of farming experience in the region.
SPEAKEASY CANNABIS CLUB Exchanges: (CSE:EASY) (Canada, home exchange), Frankfurt, (39H) (Germany);
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