Will Store Expansion Drive Interest in Planet 13 Stock?

Planet 13 Holdings [stock_market_widget type="inline" template="generic" color="default" assets="PLNHF" markup="(OTC: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] updated customers on September sales as well as the Phase II development of its superstore. The company announced improved sales per customer as it prepares to complete expansion. Both bode well for Planet 13 itself. However, the most critical questions for investors hinge on how that will help PLNHF stock, and whether it leads to much higher returns long term?

Rising Revenue, Expansion Drive Planet 13

For September, the company reported average customers per day at 1,970. Planet 13 had earlier reported an average of 2,027 customers per day in August and 1,937 in July. Hence, the superstore saw no significant changes.

However, spending by these customers rose substantially. Average spending per customer came to $94.73. That came in well ahead of the $90.25 per customer in August and the $90.41 per customer the store saw in July.

The company had experimented with different pricing, product, and advertising mixes when it saw this increase in spending per customer. Moreover, this increase came even though customers had to work around construction at its store.

This construction refers to the Phase II store expansion which includes a restaurant, café, event centre, and a production facility that customers can view. They announced that they had largely completed the building phase. Consequently, the company plans to open the restaurant and the production facility this month.

Will The Expansion Help PLNHF Stock?

Buying PLNHF stock now could be like investing in Cabela’s (which traded on the market before its takeover by Bass Pro Shops) when it had only one store.

The question for investors hinges on both if and when this will help PLNHF stock? For more than a year, PLNHF has traded between 86 cents and $2.70 per share. At around $1.75 per share, it now trades near the middle of that range.

Still, will this lead to a breakout? I think to answer that question, they need to know two things. One, will the store additions add to revenues? In theory, the restaurant and café should add to sales. Moreover, much like beer lovers enjoy touring breweries, the in-house production facility should make Planet 13’s superstore more of a destination. This should increase store traffic.

Second, can the company take this concept to other metro areas and also succeed? If so, Planet 13 could become to marijuana consumers what Cabela’s is to hunters and fishers. If this happens, buying PLNHF stock now would be like investing in Cabela’s (which traded on the market before its takeover by Bass Pro Shops) when it had only one store. That potential should make it a speculative position in itself.

Should I Invest In Planet 13?

However, more traders want to know if they can buy as an investment. Here, I also see some potential. The forward price-to-earnings (P/E) ratio stands at just 15. Today, many bigger-name cannabis stocks such as Canopy Growth [stock_market_widget type="inline" template="generic" color="default" assets="WEED.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="CGC" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"]and Aurora Cannabis [stock_market_widget type="inline" template="generic" color="default" assets="ACB.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="ACB" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] trade at price-to-sales ratios well over 15. PLNHF stock looks like a bargain in comparison.

Also, Planet 13 should also become profitable faster than these larger marijuana companies. Analysts predict a break-even third quarter and a 2-cent-per-share profit for the year. For 2020, they expect earnings to grow by 450% to 11 cents per share. At its current price, PLNHF stock could easily profit investors regardless of whether Planet 13 becomes the Cabela’s of cannabis.

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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Will Healy is a freelance business and financial writer based in the Dallas area. In addition to marijuana, energy, and mining stocks, he has also written about real estate, insurance, personal finance, and macroeconomics. In addition to Capital 10X, his articles have appeared on sites such as InvestorPlace, Yahoo! Finance, MSN Money, Kiplinger’s Personal Finance, GOBankingRates, and Seeking Alpha. Will holds a B.S. in Journalism from Texas A&M University, an M.S. in Geography from the University of North Texas, and an MBA from the University of Texas at Dallas. Phone: 416-721-8257. Address: 682 Indian Road Toronto, Ontario M6P 2C9.
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