Planet 13 Holdings PLNHF stock acquires Next Green Wave NXGWF stock and, I think this is a great move for both companies. Both PLNHF stock and NXGWF stock are in my top picks of best marijuana stocks to buy now so, this adds to a track record of mine of about 5 of my Top Picks being acquired by other companies.
The deal has NXGWF stock being swapped for PLNHF stock at ~1;1/10th meaning, for every one share of NXGWF stock share you hold you get ~1/10th of a PLNHF stock share. Initially, I looked at this as being undervalued relative to what NXGWF could be valued at. After all, in the past few months the selling of a board director’s shares, a director that promptly left the company, pushed NXGWF share price down significantly. My question due to this was: If that selling did not happen, would NXGWF shareholders gotten a price relative to the $0.50 per share price NXGWF was trading at before the selling?
Nonetheless, both stocks are significantly undervalued relative to where they should be when compared to the broader market.
Undervalued Cannabis Stocks: A buyer’s market
This may be the beginning of something far bigger for both Next Green Wave and Planet 13 Holdings as a combined company. Both are excellent cannabis stocks when compared within Cannabis Stocks: ranked – The Complete List. And, I expect these undervalued marijuana companies are all likely to make moves on each other as they try and gain market share throughout the country.
Planet 13 Holdings has a business model where they are focusing on mega-store dispensaries. Planet 13 Holdings is based in Las Vegas. They have a mega-store there that they are focusing on the experience while shopping in one of the mega-lifestyle cities of the world. It fits well. But, outside of Nevada, Planet 13 Holdings is still building up its presence. They recently opened a mega-store dispensary in Orange County, California. They are in the process of opening an additional store in Chicago, Illinois.
As for the California move, Next Green Wave allows Planet 13 a foundation for growing its own labels. Next Green Wave has a grow and process facility, with an additional 60K facility that is expected to receive its occupancy certificate at the end of 2022. This will allow Planet 13 to build up its business and utilize that location as the grow facility for its own products. Planet 13 will be opening far more dispensaries throughout California and will be able to expand its operations from this.
Plus, Next Green Wave will be able to quickly utilize all of the new grow facility. And, Next Green Wave will have new locations to distribute its own products through.
It is a win-win-win move for Planet 13, Next Green Wave, and investors of both.
You can compare both PLNHF Stock & NXGWF stock in the Cannabis Stocks – Most Undervalued posting.
Planet 13 Holdings & Next Green Wave Financials
I do not want to go too far into the metrics of the companies as they will obviously change quickly. But, combining the two will obviously create a cost-saving company that has the ability to capitalize from the move.
Remember, both of these two companies are in my Top Picks. Next Green Wave is net earnings profitable and has some of the lowest operating costs relative to revenues in the industry. Planet 13 is gaining ground on its own margins and combining the two companies will allow for Planet 13 to produce, process, and distribute its own premium products in California and increase gross margins.
Likely, it may be a solid year before we really see the savings from this move. It will take six months for the companies to finish combining legally but, they will start the process of combining during this time.
Planet 13 Holdings PLNHF Stock & Next Green Wave NXGWF Stock Activity
Initially, both stocks popped up on the news as these charts show:
I believe that both of these stocks are significantly undervalued when you compare them to the broader market and valuations being used by Mr. Market. There is a lot of potential upside and the combination of the two working together, combining, will create a powerhouse of a company.
Planet 13 Holdings PLNHF & Next Green Wave NXGWF Stock Short Interest
Interestingly, there was some interesting moves in volume leading up to the announcement. Volume on NXGWF went down significantly on Friday and Monday, just before the announcement. Then, Monday evening, the two companies announced their merge. The following day saw a big move upwards in volume and a big move higher in short-interest volume.
I found it very interesting that there was such a big drop in volume leading up to the news announcement. Then, there was a large jump upwards in volume with an equally large up-move in short interest.
Is Planet 13 Holdings PLNHF Stock a Good Investment?
As mentioned, both Planet 13 Holdings PLNHF Stock and Next Green Wave are in my Top Picks of best marijuana stocks to buy now. So, I already believe that these two companies are worthy of consideration of investing in.
Together, I believe this presents an interesting opportunity for both companies where now Planet 13 has a new operation facility for growing and processing in a state they are already making moves into.
At the same time, Next Green Wave is a premium brand product producer that now has a much larger place to distribute its products. Plus, bringing the two together ensures that the new grow facility will be fully utilized. Plus, there is additional capabilities for increasing grow and processing facilities.
In general, despite my initial hesitance with the purchase price I believe easily one can look beyond that and see a much bigger and brighter picture.