C21 Investments CXXIF stock is one of my favorite cannabis companies. C21 Investments is a cannabis company to buy now and here is why. Over the past year, the state of Nevada was under harshly punitive lockdowns. During that time C21 saw no revenue growth. Instead, however, C21 Investments worked on becoming profitable and learning how to make do with what revenue was coming. EBITDA profits continued to rise quarter over quarter. The end result is that C21 Investments is far more efficient as a company culturally. This will go a long way over time.
C21 Investments is poised to grow revenues as the state of Nevada reopens to tourism. For now, revenues are primarily coming in from local consumers; some 95% of customers are locals. This is an excellent base to build upon and since the company is already profitable they can only expand from there. There will be costs associated with targeting consumers. Nonetheless, this model should do well over time as C21 continues to grow.
But, the fact that C21 Investments is EBTIDA profitable and has gained ground on this on flat revenues is impressive. Plus, the fact that C21 Investments is also net earnings profitable means any new revenues and profits have the ability to trickle to investors. Even more impressive is the fact that when you look at valuations on C21 Investments CXXIF stock versus the broader market you can see there is significant upside potential.
C21 Investments CXXIF Stock: One of the Best Cannabis Companies
I have a running total of some 350 different cannabis companies that I am keeping track of for potential investment. I have been breaking down these companies one by one. While I believe a lot of cannabis companies will do well, C21 Investments is one of the best-performing companies there is. When you look at the metrics and you see the story that is C21 this is a company with solid upside potential.
And, the best part is that no one is paying attention to cannabis investing as an opportunity. Many people got in to cannabis early in the journey and those plays did not pan out as anticipated; cannabis companies sold off.
This is why it is important to do due diligence. There will be companies that perform very well and then there will be some that underperform.
C21 Investments CXXIF Stock: A Cannabis Stock To Buy Now
On a relative basis, C21 Investments CXXIF stock is significantly undervalued when you look at revenue growth rate potential and the EPS metrics. Revenue expectations for the state of Nevada are for an approximate 40% increase by the end of 2023. At that pace, given the margins with C21 Investments the company is significantly undervalued on a relative basis.
Because so many retail investors saw their investments sold off by investing in start-up companies too early, cannabis companies have not seen a tremendous amount of inflow of new investors.
I see this as an opportunity for astute, savvy investors. Starting a cannabis company is not an event, it is a process. Investing in these companies is not a process it is an event. With cannabis investing, for those that work through the company data and weed out the poor performers versus the better performers, those astute investors will be well rewarded.
C21 Investments Financial Data
The metrics for C21 are impressive in many regards. Here is a breakdown of the various components from the latest financial data.
Revenues remain flat, as you can see from this chart:
As mentioned, and per the latest C21 Investments MD&A, 95% of the revenue came from local consumers. This means there is a core base for a business that will be easy to maintain via continuous communication and direct marketing.
So, real growth in revenue will come in the form of marketing to tourists. This will not be simple. But, C21 Investments is profitable so they can invest in these kinds of programs and do so more heavily versus counterparts in the industry that have not attained profitability yet. That is a key advantage. It is important.
Gross margins have always been something that I thought had a lot more upside potential. And, I am probably not too far off on that. One of the elements of gross margins is the monthly maintenance on a grow facility.
As you can see in the photos above there is plenty of room to expand. But, think this through for a moment… this facility is already paid for. So, any new production will add significant marginal profits versus the increased marginal costs associated with growing more product.
Operating efficiencies for C21 Investments may be some of the best in the industry. Usually, I see numbers of between 30% – 35%; C21 performs better than that:
Operating efficiencies are a mathematical measure of total operating costs over total revenue. To be sure, you want the very lowest number possible here. The lower the number then the better the performance.
This shows how efficient management is and that their focus is more so on profits than expenditures that are out of line with industry norms. Keep in mind, the best companies I see are hitting 30% – 35% but, I have seen some companies coming in over 100% on total operating costs relative to revenues.
This, again, is a competitive advantage that will pay spades in the future. Afterward, once C21 Investments has secured its position as a top marijuana stock then management can get a well-deserved reward.
EBITDA & Net Income
C21 Investments is both EBITDA profitable and net earnings profitable; a huge advantage against the competition in the area:
C21 Investments has been EBITDA profitable for nearly two years. The importance of this says that scaling will mean marginal profits will outweigh marginal costs. Obviously, as per the photo above, increasing any output would be a minor task seeing that the facility already exists. All C21 would have to do is simply open up more space. Because of this scalability will be an inexpensive move.
However, it is also important to note that many other cannabis companies have existing, unused grow capacity. But, not many other cannabis companies are simultaneously profitable. That is a distinct difference.
Once again, C21 Investments is profitable on the very bottom line:
Whereas other cannabis companies are still at the scaling-up stage after achieving EBITDA profitability, C21 Investments is profitable on the absolute bottom line. This is the main goal. This will only expand after more scale is achieved and C21 Investments starts to target tourists. Given their cash positive status they will be ultra-competitive versus competitors.
That is a distinct difference.
Is C21 Investments a Good Buy?
First, there are initiatives that state in Nevada alone C21 is targeting $100M in revenue. What this means is that C21 Investments CXXIF stock is set to start expanding in Nevada and when this expansion phase is complete C21 will be targeting $100M in Nevada from these retail outlets. They already have the requisite grow facility capabilities so any new facilities to sell future product.
With current production capacity, I am looking for C21 Investments CXXIF stock to move to $2.50 with further movement to $5.00 and then $7.50 over the following year as the company expands its footprint.