This Marijuana Penny Stock Had A Better 1-Year Return Than Tesla, Apple, Facebook And Amazon

Those investors who added Reddit’s favorite marijuana stock, Sundial Growers SNDL, to their portfolios a year ago must be very pleased today.

The popularity of the Alberta-based company has grown significantly because of its cultivation of a particular range of cannabis strains. Its flagship brands include 1) Heal – with cannabis products used as prescription medicine; 2) Help – offering marijuana products for overall health and wellness through CBD and 3) Play – cannabis products for complementing social, spiritual and recreational occasions.

Sundial Growers is a frequently mentioned stock on Reddit’s r/WallStreetBets forum, which has over 11 million members. The retail investment forum is best known for driving up shares of heavily-shorted companies such as GameStop Corp. GME, which it drove through the roof last January. Then in February, Redditors did the same for Sundial, causing the stock to jump 79% in one day. This was short-lived though. By the next day, Sundial's shares closed down 19%.

See also: DEA Raises Production Levels For Psychedelics, Deschedules Cocaine-Derived Drug; Could Cannabis Be Next?

Despite sinking from its peak in February, Sundial's 12-month performance surpassed some of the most popular stocks in the world, such as Tesla TSLA, Apple AAPL, Amazon AMZN, and Meta Platforms (previously Facebook) FB.

Dealing With Operational Challenges, Alcanna Acquisition 

Over the last two years, Sundial has had some operational challenges. Its cultivation results were poor and the company was spending too much capital - burning through roughly $15 million a month, leaving it with a peak debt of around $250 million. So, the company undertook a series of restructuring moves such as large asset sales, pulling out of six countries and laying off over 500 employees. As a result, it managed to retire all of its debt and refocus its business model.

See also: This Cannabis Stock Has Beaten Microsoft, Netflix, Apple And Facebook

In October, the company announced another important business move: the acquisition of Canadian liquor retailer Alcanna Inc. LQSIF for roughly $346 million. Apart from Alcanna's longstanding liquor business with a trailing 12-month free cash flow of $16.4 million on a built-out retail platform, the acquisition brings Sundial enhanced exposure with an investment in Nova Cannabis Inc. NOVC NVACF, a publicly listed, pure-play cannabis retail operator in which Alcanna holds an approximately 63% equity interest. The acquisition is expected to close before the end of the year. 

Here's how returns break down from November 2020 to the present:

Amazon is up from $3,099.40 a share to $3,696.06 for a return of 19.25%;

Facebook is up from $269.70 a share to $338.69 for a return of 25.58%;

Apple is up from $117.34 a share to $157.87 for a return of 34.54%;

Tesla is up from $489.61 a share to $1,096.38 for a return of 123.93%

And finally, Sundial is up from $0.2550 per share to $0.7452 for a return of 192.23%. 

Photo: Courtesy of Joel Muniz on Unsplash