CLS Holdings (CLSH) Seals The Biggest Deal In Its History.
Revenue Ramp, Cash: We’re In VEGAS, Baby!
Rally On, Traders!
Plenty of fresh developments in one of the most dynamic investment categories Wall Street has seen in years . . . you’ve got the entire nation of Canada voting to legalize, the FDA approving the first pharmaceuticals based on the molecule in question, all great stuff.
Headlines like that draw Wall Street back to everything in the theme. After all, it’s hard to argue with the overall growth curve here.
Barely six years ago, this whole industry was a legitimate zero, just a trickle of ruthlessly regulated “medicinal” sales around the black-market fringe. Now it’s a $10 BILLION cash machine . . . and it’s just getting started as state after state steps up!
Look at CLS Holdings (CLSH) for all the evidence you need of blockbuster growth in this space. A week ago, this was just another promising start-up, booking maybe $200,000 a month in sales.
I know that looks like peanuts in mega-cap land, but what more do you really need from a stock where the whole company is valued at only $0.70 a share right now?
Baby stock, baby footprint . . . the price-to-sales comparison is actually in the range of established giants like Twitter even though CLSH has a much more dynamic expansion ramp on its side.
After all, CLSH just signed a deal that QUADRUPLES its sales literally overnight. We’ve been looking for this acquisition for months but it’s finally 100% closed and on the books now.
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But back to that deal and why this particular stock just got “interesting.” CLSH jumps from a run rate of $200,000 a month to $850,000 without even stretching.
Their back end (everything from grow to processing) was already bringing in record cash. Adding the retail presence to the mix brings a whole lot of cash to the party . . . for an extremely good reason.
The company CLSH just bought, Oasis, has a fully legal and licensed retail operation in LAS VEGAS. Now that Nevada has gone “recreational,” sales are going through the roof.
I was in a Vegas cab recently and the driver couldn’t talk about anything but how the tourists always ask where they can get to the recreational store. Monthly turnover has already reached $40 million . . . and it’s still ramping up as fast as the party people can leave the airport and call their Uber.
That’s the market CLSH has just opened up. They’re ambitious. They think they can TRIPLE production by the end of the year and move that product into the store.
They have a reason to be confident. Floor traffic in the store is tracking 400 people a day, each buying above $50 on average. What they’re buying runs the gamut: oil concentrates, vape pens, tinctures, you name it.
A lot of that product is branded and proprietary. CLSH is already a distributor here, selling “City Trees” in 20 stores from Vegas to Reno. Proprietary is usually a good thing for margins. We like that!
And it’s still early stages. CLSH was already active in Colorado but Nevada has only been in recreational mode for about a year. The numbers are still a lot closer to the ultimate floor than any kind of mass-market “maturity.”
The goal appears to be vertical domination. CLSH grows the plant. It processes the raw material into value-added oils, extracts and so on. It distributes the material to stores. Now it’s active on the store side as well, closing the “last mile” from back to front.
It isn’t abstract or even especially esoteric. There’s no jargon here or weird technology to get your head around, just a market that didn’t even exist a year ago and now CLSH is a player. At every step along the way, CLSH gets its “ticket” punched.
Add up the steps and there’s real money to capture here. The stock is only $0.70 now. Production plans suggest at least a 3x revenue ramp, not counting any of the steps along the way. That’s just the BASE!
The store can do $38,000 a DAY when Vegas is really humming. Last I heard the company’s 22,000 square-foot warehouse had room for vast expansion.
Oh, did I mention the cash? CLSH raised $13 million Canadian a few days ago to fund future expansion. They only wanted $10 million but investors basically threw them 30% more cash than anyone expected.
Those investors were lucky. They got in at $0.45 (Canadian) for 1 share and 1 option to buy more at $0.65. Aggregate price per share: $0.55.
We aren’t those lucky Canadians but now CLSH has plenty of money to fund additional acquisitions. Or develop new products. Or build new grow facilities. Either way, they’re flush.
Are you less than flush? The webinar starts at 5 ET, which is only a few minutes away. CLICK HERE to register . . . I hate it when I miss out on a sizzling trade because I don’t have the dry powder, the information here should help smooth the lean times.
And the deal demonstrates a reasonable base on the price action. If CLSH looked like it can’t hold $0.55, those deep-pocket investors are fools. I don’t think they’re fools.
What I see is an emerging player in one of the most dynamic markets on the planet . . . sizzling product category, go-go-GO geography . . . with cash and a sales ramp that would make Wall Street’s head spin.
The industry went from zero to $10 billion in barely 6 years, starting from a few states and spreading across the country.
CLSH is going from a lowball $200,000 wholesale run rate to 4x that. If that rate can continue, we’re looking at a monster play here.
Happy, Happy, Happy Trading!
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