Growth Could Justify Speculation in Liberty Health Stock

Investors should put Liberty Health [stock_market_widget type="inline" template="generic" color="default" assets="LHS.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="LHSIF" markup="(OTC: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] stock on their watchlists. Although it has little recognition outside of Florida, its dispensaries continue to open across the state, and its flower products continue to gain market share. Moreover, it has begun to make itself a multi-state operator by expanding beyond Florida.

Unfortunately for current investors, LHSIF stock continues to fall deeper into penny-stock status. This means a high level of risk for investors. However, its massive revenue growth and rapid expansion could make a speculative play in Liberty Health stock worthwhile.

Liberty Focused On Expansion, Market Share

Liberty Health produces and sells medical cannabis products. Although headquartered in Toronto, Liberty Health conducts practically all of its business in the state of Florida. It operates dispensaries in the Sunshine State where it offers customers both products and consultations.

It has also made moves recently to expand beyond Florida. The company also received licenses to sell some cannabis-based products in the state of Ohio. They operate there with a joint venture partner under the name Mad River Remedies.

Despite a low share price and the market cap of about $128 million, it has earned some accolades. It ranks 2nd in the state of Florida for sales of smokable marijuana. Also, it has successfully fought off a short-seller attack related to the previous stake Aphria [stock_market_widget type="inline" template="generic" color="default" assets="APH.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="APHA" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] held in the company. Authorities cleared Liberty of wrongdoing, and Aphria later sold its stake in the company.

LHSIF Stock Fell Despite Huge Revenue Growth

Its most recent earnings report has also outlined the progress. For its first quarter of fiscal 2020, the company brought in more than C$5.52 million ($4.14 million) in revenue. The company earned just over C$1.14 million in revenue in the year-ago quarter. Despite the higher revenue, the company reported almost C$3.42 million ($2.57 million) in losses, about one Canadian cent per share. This compares to losses of C$3.17 million in the same quarter last year.

LHSIF stock has spent the last 3½ years trying to avoid penny stock status. It has failed at this for most of 2019, and it currently trades at about 38 cents per share. It sold for around 42 cents per share before its July 31 earnings report. It spiked to 44 cents per share following the announcement. However, it resumed its downward trend soon after, a move which took it to its current price.

Should I Buy Liberty Health Stock?

Admittedly, the low share price makes LHSIF stock a risky prospect. The C$5.42 million ($4.07 million) in cash reserves will not keep the company in business for long. Investors should also note the C$30.55 million ($22.94 million) in debt. Still, both the losses and the low cash reserves mean that it will probably have to turn to the debt markets or share issuance to stay afloat.

However, I also see many encouraging signs. The company has signed leases on six additional Florida locations. Both that and the move into Ohio should keep revenue growth high enough to encourage more investment and possibly lead to profitability. Should the equity reverse its downtrend, investors should consider a speculative move into LHSIF stock.

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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