PI Financial released their top picks for 2021 today. Within, they named Columbia Care (CSE: CCHW) (NEO: CCHW) and Red White & Bloom (CSE: RWB) as their top cannabis picks or, as they like to call them, “Special Situations.” They also named Endeavour Mining Corp, GoGold Resources, and 92 Mining Inc as their top mining picks.
PI Financial’s Jason Zandberg has a C$12.50 price target and buy rating on Columbia Care, while the average 12-month price target is C$10.39. Columbia Care has ten analysts covering the stock. Two analysts have strong buy ratings, while seven have buys and one analyst has a hold rating. He says Columbia Care is primed to flourish in 2021.
Zandberg says that the end of 2020 was very catalyst driven with Q3 numbers, November elections that passed five new adult-use markets, and the Georgia runoffs. He adds that 2021 should be another significant year for cannabis and says, “our view is that the rally has just begun.” He calls the almost C$1 billion in equity raises flowing into the space as another reason for saying this is just the start of the run.
Zandberg highlights that the six states the company operates in are either in the process of, or are expected to, go from medical to recreational in the next two years. Those states are Arizona, New Jersey, New York, Pennsylvania, Virginia, and Florida. He adds that a typical increase in market size a state sees when flipping from only medical to recreational is 3-5 times, while commenting that Columbia Care has one of the highest exposure to this switch.
Zandberg writes, “Columbia Care has long been recognized as having one of the best medical cannabis product portfolios.” Which is backed up by best in class management and stands out among its peers. The two founders own over 30% of the shares outstanding.
Onto Red White and Bloom, Zandberg points to the state of Michigan, where the company is the largest operator. The company has pending acquisitions that, when closed, will give Red White and Bloom 10 additional dispensaries, and they also own the largest vape pen manufacturer in the state.
Zandberg has a C$2.75 price target and buy rating on Red White & Bloom, and PI Financial is the only analyst to cover the company. He highlights that the company has lagged its peers, stating that there will be a “slingshot” with upcoming sales and the closing of pending M&A that will re-rate the stock.
Zandberg comments that Michigan was the fastest growing market in 2020, with their adult-use market growing at an annualized rate of 566%. The size of the market is currently larger than both Illinois and Florida.
He adds that Platinum Vape is on pace to do $150 million in 2021 sales and that the company has licensing rights for the High Times brand in Michigan, Massachusetts, and Florida. He writes, “The HighTimes brand is an iconic cannabis brand, and we expect it to resonate with consumers as it is synonymous with high quality cannabis and the cannabis counter-culture.”
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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