Marijuana Stocks: The Biggest U.S. Reporting LOSERS Over The Past 12-Months

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Includes: ATTBF, BLPG, BTFL, CBDS, CCAN, CNAB, CRLRQ, ENRT, ETST, KSHB, MCIG, MNTR, NTRR, OWCP, TAUG, UPOT, VAPE, XXII
by: Anthony Cataldo

Summary

There are N=74 stocks in the “US Reporting” Marijuana Index; I tri-chotomized the population into (1) losers, (2) winners, and (3) no change samples.

Eighteen (24%) of the N=74 stocks have declined in price-per-share over the 12-month period ending February 14, 2016 and represent recent “losers.”.

Seven of the eighteen (39%) “losers” have positive working capital positions, the first and most important “liquidity” measure, in terms of additional, near-term financing needs.

Therefore, there is no immediate need for additional debt or equity financing (or dilution) for the 7 firms examined in this article.

I hesitate to recommend even a single one of the 7 firms with positive working capital positions for a long-term “buy-and-hold.”.

I examine near-term liquidity needs for U.S. Reporting marijuana stocks that have declined in price-per-share over the past 52-weeks. It was my hope that I could identify some downside over-reactions that could lead to profitable entry and stock price recovery. I see no compelling evidence that would lead me to recommend even a single one of the stocks, at current price-per-share levels, despite their positive working capital positions. These stocks appear to be declining along with others in the marijuana sector or segment of the economy.

Below is the chart for the Marijuana Index of U.S. Reporting firms, for the 52-weeks ending February 14, 2016:

Click to enlarge

Below is a table, developed from the above, Marijuana Index website, where market capitalization (market cap) is provided in millions of U.S. dollars. This data was captured on February 16, 2016:

Name

Symbol

Last

Chg

% Chg

High

Low

Market Cap

1

Tauriga Sciences Inc

(OTCPK:TAUG)

$0.0020

-$0.0005

-20.00%

$0.0020

$0.0020

$1.77

2

Earth Science Tech Inc

(OTCPK:ETST)

$0.2000

-$0.0500

-20.00%

$0.3000

$0.2000

$7.76

3

Canadian Cannabis Corp

(OTCPK:CCAN)

$1.2000

-$0.2700

-18.37%

$1.5000

$0.8000

$37.75

4

Mentor Capital Inc

(OTCQB:MNTR)

$0.2500

-$0.0430

-14.68%

$0.3300

$0.2500

$4.01

5

Abattis Bioceuticals Ord

(OTCQB:ATTBF)

$0.0330

-$0.0053

-13.84%

$0.0400

$0.0330

$3.00

6

United Cannabis Corp

(OTCQB:CNAB)

$0.1802

-$0.0178

-8.99%

$0.2050

$0.1802

$8.11

7

Enertopia Corp

(OTCQB:ENRT)

$0.0089

-$0.0008

-8.75%

$0.0093

$0.0070

$0.63

8

Cannabis Sativa Inc

(OTCQB:CBDS)

$0.4350

-$0.0400

-8.42%

$0.4700

$0.4000

$7.03

9

Vape Holdings Inc

(OTCPK:VAPE)

$0.0024

-$0.0002

-7.69%

$0.0026

$0.0024

$0.39

10

Crailar Technologies Inc

(CRLRF)

$0.0013

-$0.0001

-7.14%

$0.0013

$0.0013

$0.09

11

22nd Century Group Inc

(NYSEMKT:XXII)

$0.9800

-$0.0700

-6.67%

$1.1000

$0.9800

$69.55

12

OWC Pharmaceutical Research Corp

(OTCQB:OWCP)

$0.0800

-$0.0050

-5.88%

$0.0800

$0.0800

$6.51

13

Neutra Corp

(OTCQB:NTRR)

$1.1600

-$0.0700

-5.69%

$1.2300

$1.1000

$1.66

14

Monarch America Inc

(OTCPK:BTFL)

$0.0006

$0.0000

-4.67%

$0.0007

$0.0005

$0.07

15

Blue Line Protection Group Inc

(OTCPK:BLPG)

$0.0190

-$0.0008

-4.04%

$0.0201

$0.0187

$2.40

16

MCIG Inc

(OTCQB:MCIG)

$0.0321

-$0.0013

-3.89%

$0.0334

$0.0289

$9.65

17

Indie Growers Association

(OTCPK:UPOT)

$0.0293

-$0.0006

-2.01%

$0.0293

$0.0293

$4.13

18

Kush Bottles Inc

(OTCQB:KSHB)

$1.6252

-$0.0248

-1.50%

$1.6500

$1.6252

$75.55

TOTAL in millions of dollars

$240.06

Click to enlarge

In aggregate, the market capitalization for the above 18 firms exceeded $240 million.

A chart, developed from the above table, focusing only on the 52-week percentage change in the firm's stock price, follows:

Liquidity

I found it remarkable that the 7 "losers," in terms of price-per-share changes over the 52-week period, have positive working capital positions, based on Yahoo!Finance measures and their current ratio on February 16, 2016. They are:

  1. Mentor Capital Inc
  2. Cannabis Sativa Inc
  3. Vape Holdings Inc
  4. 22nd Century Group Inc
  5. OWC Pharmaceutical Research Corp
  6. MCIG Inc
  7. Kush Bottles Inc

One-year charts and additional details for each of the 7 firm were developed on February 17, 2016, and during the trading day, as follows:

1-Mentor Capital Inc

Mentor has net losses and negative cash flows from operations. Revenues are growing, through September 2015, but accrued and related party salaries and convertibles of more than $1 million have been established and are almost certainly designed to assure that long-term investors will never benefit from any action other than a day-trade for this stock.

The firm has a negative profit margin, a negative operating margin, a negative return on assets, and a negative return on equity. However, in their Yahoo!Finance profile or business summary, they explicitly state that they only invest in firms with earnings:

The firm invests only in companies that have earnings.

Using Mentor's own trading strategy, you should not invest in this firm.

2-Cannabis Sativa Inc

Cannabis Sativa is generating net losses and negative cash flows from operations. Revenues are tiny and costs of revenues are double the most recent revenue measures through September 2015. $3.2 million in stock was issued during the 9 months ending September 2015, so the source of the positive working capital position has been achieved through dilution.

3-Vape Holdings Inc

This Seeking Alpha article by 3D Analytics correctly predicted a great short opportunity for Vape:

"We believe VAPE should be trading at less than $1 per share, which is where the stock was trading before all the marijuana hype began."

Vape closed at $18.50 per share on March 31, 2014, the date of the above article.

Vape is generating negative cash flows from operations, through September 2015. Gross profits have declined, year-over-year, and the capital structure and dilution through convertibles is very complex for a firm with general and administrative expense that over-whelm any revenue growth that might, otherwise, be impressive.

4-22nd Century Group Inc

This chart does not look like a "loser" over the 52- week period, so the data source might have been lagging. The below is from Yahoo!Finance, extending or pre-dating the dates included in the above chart, where the price-per-share closed as high as $1.21 per share on February 5, 2016:

Date

Open

High

Low

Close

Volume

Feb 17, 2015

0.95

0.97

0.89

0.92

361,600

Feb 13, 2015

0.98

1.00

0.85

0.92

855,900

Feb 12, 2015

1.00

1.03

0.99

0.99

164,000

Feb 11, 2015

1.00

1.04

0.97

0.98

303,100

Feb 10, 2015

0.97

1.08

0.96

0.99

375,500

Feb 9, 2015

1.16

1.18

0.97

1.01

529,000

Feb 6, 2015

1.23

1.25

1.16

1.17

205,800

Feb 5, 2015

1.21

1.25

1.19

1.21

106,600

Click to enlarge

22nd Century has generated net losses negative cash flows from operations through September 2015. Cost of goods exceeds revenues, resulting in a gross loss.

This stock is quite volatile, and is most likely to appeal to day-traders. If you like this firm, I would recommend that you consider entry at about $0.60 per share, if this price is revisited.

5-OWC Pharmaceutical Research Corp

OWC Pharmaceutical Research has no revenues through September 2015, but has more than $1/2 million in cash on its balance sheet. The firm has net losses and negative cash flows from operations.

6-MCIG Inc

MCIG has a very "skinny" gross margin for sales generated through the 3 months ending October 2015 (12%). It was much, much higher for the same period ending for 2014 (51%). This concerns me, as it suggests little or no pricing power for the firm in the near-term. They are generating net losses and negative cash flows from operations.

7-Kush Bottles Inc

The OTCQB Certification for Kush Bottles was completed and filed on or about January 12, 2016.

Kush Bottles, Inc. markets and sells packaging products and solutions to customers operating in the regulated medical and recreational cannabis industries.

The firm produces a variety of products, including water pipes:

They managed a tiny net income for the period ending November 30, 2015, announced approximately 1 week after public trading began:

Click to enlarge

Summary

The objective of this article was to (1) begin with U.S. Reporting marijuana stocks, (2) identify the "losers" over the past 52 weeks, and (3) more closely examine the 7 firms identified with positive working capital positions. Though 1 or 2 might represent good day-trading candidates, none appear to have any fundamental value or near-term earnings or positive cash flow from operations potential that would inspire me to buy-and-hold for a long-term portfolio. I will avoid all of these stocks.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.