LIFD's 5x Potential: Is This Psychoactive Hemp Stock The Next Big Speculative Buy?

A leading player in psychoactive hemp-derived products (PHDs), LFTD Partners Inc. LIFD is trading at just 0.2x CY24 EV/Sales, offering a steep discount. The stock has plummeted over 90% from its April 2021 peak but remains cash flow positive with a net cash position, leaving the company ripe for expansion through mergers and acquisitions. 

Despite regulatory pressures, LIFD's compliant strategy is expected to drive market share gains. According to a report from Zuanic & Associates, the stock could see a 5x rise by December 2025.

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Valuation And Growth Potential

LIFD trades at 0.2x CY24 EV/Sales, below its estimated liquidation value. Zuanic’s report suggests that if LIFD were to reach 0.5x sales on projected estimates, the stock could rise 5x by December 2025. 

This makes the stock an attractive, albeit speculative, investment. The analyst assigns only a 10% probability to a scenario of a federal ban on PHDs, providing further support for the stock's upside potential. However, the future of LIFD is highly binary, driven by regulatory developments.

Regulatory Risks And Opportunities

LIFD's business has been heavily impacted by regulatory challenges at both the state and federal levels, with 19 states having banned PHDs outright. 

However, according to Zuanic, the upcoming Farm Bill is expected to delegate the regulation of PHDs to individual states, potentially allowing LIFD to capitalize on compliant strategies in states with strict regulations rather than outright bans. 

This could lead to market share gains and top-line growth.

Zuanic notes that LIFD has the opportunity to benefit from collaboration with THC cannabis companies entering the PHD space, which could validate the compliant PHD market and lead to potential joint lobbying efforts. 

The long-term regulatory convergence between PHDs and THC products is another potential upside.

Read Also: ‘This Is Life Or Death’: Families Of Disabled Children Panic Over Gov. Newsom’s Hemp CBD Ban And Evaluate Lawsuit

Bull Vs. Bear Case

In the bull case, if the regulatory landscape clarifies and no state bans emerge in key markets, LIFD's EV/Sales multiple could return to a 0.5-1.0x range. 

This would imply a substantial upside. In the bear case, if federal legislation leads to a ban on PHDs or the company's nutraceutical strategy fails, the stock could face a total loss in value. However, Zuanic assigns just a 10% probability to this worst-case scenario.

Read Next: Gov. Newsom’s Hemp Ban Goes Into Effect: Consequences For Industry, Investors, Patients