GSRX Industries (OTCQB: GSRX) requested final inspection of its pre-qualified medicinal cannabis dispensary located in Fajardo, Puerto Rico. Once the dispensary passes inspection and the Department of Health of Puerto Rico issues the requisite Occupational License for Establishment, the Company can start generating sales from its fifth dispensary on the island.
Why It Matters: GSRX currently operates four other Green Spirit RX dispensaries in Puerto Rico, with locations in Dorado and Carolina and two in San Juan. The Company has pre-qualified licenses for four additional locations in Isla Verde, Bayamón, Old San Juan, and Guaynabo.
Complementing its growing network of dispensaries, GSRX also holds pre-qualified licenses in Puerto Rico for cannabis manufacturing and transportation, which allows for at-home patient delivery.
In addition, the Company is also currently in the process of acquiring Dispensario 420, an operating medicinal cannabis dispensary in Caguas. Once the acquisition is completed, the Company plans to rebrand under the Green Spirit RX brand. While there is no assurance this acquisition closes, GSRX is already well on its way to operating the dominant marijuana brand on the island.
What’s Next: Interest from major consumer companies like Coca-Cola (NYSE: KO) has sent shares of cannabis stocks higher this year, and many experts believe the trend is just getting started.
GSRX has been carving out a low between $1.50 and $2.00 per share over the past two months. A recent wave of buying sent shares to their highest close since August on Monday.
Third quarter earnings are scheduled for release on October 18. With more dispensaries in operation for a greater portion of the quarter than during the second quarter, it’s likely GSRX will post solid top-line growth again.
Disclosure
GSRX Industries (OTCQB: GSRX) is a client of RedChip Companies. RedChip Companies, Inc. received 1,000,000 registered shares of GSRX for consulting services and 50,000 shares for investor awareness services. Be advised RedChip intends to sell some or all of its shares at any time, including when you are buying.
Cannabis companies are poised to take the consumer space by storm.
That’s at least the takeaway from Cowen analyst and cannabis bull Vivien Azer’s latest research note. Azer nearly tripled her revenue-growth based price target on Tilray (NASDAQ: TLRY), the leading pot stock, to $172 from $62, maintaining an outperform rating. She also boosted her price target for Canopy Growth Corporation (NYSE: CGC) to $82 from $74.
The “well-capitalized cannabis industry has been evolving rapidly” and looks poised to take on a larger total addressable market than originally forecast, Azer wrote in the note. “Given the nascent stage of global cannabis, we believe that revenue growth should serve as the primary valuation methodology.”
And this revenue growth will come from what she sees as four key verticals: adult use, beauty and nutraceuticals, over-the-counter pain and sleep, and pharmaceuticals, she said.
“We believe that all four of these verticals represent large market opportunities,” she said. Consumer industry veterans “are beginning to embrace the broad market potential for cannabis as a global, multi-dimensional category, given the talent migration to cannabis.”
Earlier this year, CGC secured a $4 billion investment from Corona beer-maker Constellation Brands (NYSE: STZ), sending shares soaring. And shares of peer group pot stock Aurora Cannabis (OTCQX: ACBFF) jumped just on reports that it was in exploratory talks with Coca-Cola for weed-infused beverages – no formal deal necessary.
As the old saying goes, a rising tide lifts all boats. The tide is rising, and it appears it has a long way to go. Investors that find the right opportunities in this space could reap big rewards.
In “The Strong Case for Small-Cap Investing in Today's Market,” an article recently published on forbes.com, John P. Reese, CEO of Validea Capital Management, lists what he says are the reasons for the recent strong performance of small-cap stocks. Reese also reveals the criteria that small-cap companies must meet to merit inclusion in the Validea Small-Cap Growth Portfolio.
Citing S&P Dow Jones Indices, Reese says that small-caps are outperforming large-caps by the largest margin in eight years. Reese quotes the managing director and head of U.S. equities of Indices, Jodie Gunzberg, who says that smaller companies are outperforming larger companies by 10.1%.
Reese gives two main reasons for the small-cap rally:
The tighter domestic focus of small-cap companies. The threat of a trade war affects small-cap companies less than larger multinationals, because small-cap companies derive more of their income from the U.S. market. Higher exposure to the U.S. environment means that tax cuts and deregulation have a more powerful positive effect on small-cap companies. Domestic economic growth and a stronger dollar also influence U.S. small-caps.
Mergers and acquisitions, in part the result of the recent U.S. tax reforms and decreased regulations, are driving high performance among small-caps.
Reese lists the criteria a small-cap stock must meet in order to be considered for inclusion in Validea’s Small-Cap Growth Portfolio.
TTM after-tax margins must be at least 7%, and they must be “stable” (consistent or growing over the previous three years)
“Relative strength” of at least 90. Reese does not offer a definition of relative strength.
Revenue and earnings must have grown 25% over the previous year.
Inside ownership of at least 10%.
Positive operating cash flow, also known as free cash flow.
PEG ratio of 0.5 to 0.65. PEG stands for “ratio of price-earnings to growth in earnings-per-share.”
Low leverage, i.e., little (or preferably no) debt.
Among the companies meeting at least one of Reese’s criteria are Trex Company (NYSE: TREX), Qualys (NASDAQ: QLYS), Inogen (NASDAQ: INGN), Gorman-Rupp Co. (NYSE: GRC), and AeroVironment Inc. (NASDAQ: AVAV).
Note: In the criteria above and throughout the article, Reese offers no concrete definition of a small-cap company. Readers are left to guess whether by “small-cap” Reese means a company with a market cap of less than $10 billion, less than $1 billion, or less than some other amount.
Even in an age of instant information, Reese says, companies that meet his criteria can escape the attention of investors. Though fundamentally sound, the companies are little-known and not covered by the big media outlets.
The takeaway from Reese’s article seems to be this: In the current economic climate, in which the high exposure of small-caps to a revved-up U.S. market is affecting the entire small-cap sector, investors who apply Reese’s principles can discover particularly strong small-cap companies—companies that, he implies, may even outperform the currently strongly performing small-cap market.
Digital Ally, Inc. (NASDAQ: DGLY), a company with the mission to provide law enforcement agencies, emergency management, and commercial companies with the highest quality video solutions and software management, is pleased to announce that it is now a member of the Amazon Web Services (AWS) Partner Network (APN).
Why It Matters: “After years of using AWS, Digital Ally is excited to advance its relationship with AWS and join the APN,” said Stan Ross, Chief Executive Officer of Digital Ally Inc. “AWS is one of the most respected cloud service providers in the world. By furthering our collaboration, Digital Ally will have access to tools and support that will not only benefit our current customers but future customers as well.”
The Backstory: Digital Ally, headquartered in Lenexa, KS, specializes in the design and manufacturing of the highest quality video recording equipment and video analytic software. Digital Ally pushes the boundaries of technology in industries such as law enforcement, emergency management, commercial fleets, and consumer use. Digital Ally’s complete product solutions include in-car and body cameras, cloud and local management software, and automatic recording technology. These products work seamlessly together and are simple to install and operate. Digital Ally products are sold by domestic direct sales representatives and international distributors worldwide.
Disclosure
Digital Ally, Inc. (NASDAQ: DGLY) is a client of RedChip Companies, Inc. DGLY agreed to pay RedChip Companies, Inc., a monthly cash fee for four (4) months of RedChip investor awareness services.
Since 2010, over 500 grants totaling over $494,000 have been awarded to Illinois fire and emergency organizations in the Company’s service area.
Over $77,000 will be shared by 78 Illinois fire departments through Illinois American Water’s 2018 Firefighter Grant Program. Since the program was created in 2010, over 500 grants totaling over $493,000 have been awarded to fire and emergency organizations serving customers in Illinois American Water’s service area.
The Backstory: Illinois American Water, a subsidiary of American Water (NYSE: AWK), is the largest investor-owned water utility in the state, providing high-quality and reliable water and/or wastewater services to approximately 1.3 million people. American Water also operates a customer service center in Alton and a quality control and research laboratory in Belleville.
With a history dating back to 1886, American Water is the largest and most geographically diverse U.S. publicly traded water and wastewater utility company. The company employs more than 7,100 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to over 14 million people in 45 states and Ontario, Canada. American Water provides safe, clean, affordable and reliable water services to our customers to make sure we keep their lives flowing. For more information, visit amwater.com and follow American Water on Twitter, Facebook and LinkedIn.
Catasys, Inc. (NASDAQ: CATS), a leading AI and technology-enabled healthcare company, today announced that a paper authored by its Senior Vice President and Chief Medical Officer Omar S. Manejwala titled “Anxiety Disorders: Scope and Clinical Considerations” has been published in the peer-reviewed Journal of Managed Care Medicine.
Why It Matters: Dr. Manejwala writes, “Despite the widespread availability of multiple treatments for anxiety disorders and substantial morbidity of untreated illness, the vast majority of individuals with anxiety disorders remain untreated. A National Comorbidity Study Replication found that only 36.9 percent of individuals with anxiety disorder received any treatment in the past 12 months and delay among those who eventually make treatment contact ranges from nine to 23 years. Fewer than one-third of the cases received minimally adequate care.
The Backstory: Catasys, Inc. harnesses proprietary big data predictive analytics, artificial intelligence and telehealth, combined with human intervention, to deliver improved member health and cost savings to health plans through integrated technology enabled treatment solutions. It is our mission to provide access to affordable and effective care, thereby improving health and reducing cost of care for people who suffer from the medical consequences of behavioral health conditions; helping these people and their families achieve and maintain better lives.
Disclosure
Catasys (NASDAQ: CATS) is a client of RedChip Companies, Inc. CATS agreed to pay RedChip Companies, Inc. a monthly cash fee for RedChip investor awareness services and consulting services.
Quote of the Week
"We've found that the area that we can perform the best is in the microcap space. So it's a microcap value bent that really differentiates us, and that is because it's an area of the market where there are enormous inefficiencies and where our hard work pays off, because we can identify opportunities that are significantly underpriced."
-Eric Kuby, Chief Investment Officer of North Star Investment Management
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