Medicine Man Technologies Inc (OTCMKTS:MDCL) shares have been ripping higher as the company continues to pile into an aggressive M&A roll-up strategy that could spell accelerating top-line growth for the company. Right now, the stock is trading at 14x sales, which puts it solidly in a sweet spot for momentum/growth strategies.
The company is capitalizing on recent changes in Colorado state law (namely, passage of HB 19-1090, which will take effect on November 1, and allow for outside investors, venture capitalists and private equity firms to gain investment access to Colorado’s cannabis industry. MDCL has been a well-respected and successful advisor and consultant to firms in the cannabis industry for many years. But this shift in the legal context has created a new opportunity to consolidate production and distribution under the MDCL umbrella in a roll-up that could produce significant revenue growth for a stock that is already cheap relative to peers in the space.
In all, the company has entered into binding term sheet agreements to roll up some bread and butter in the Colorado cannabis marketplace, including 12 cultivation facilities, 7 proprietary extraction facilities, 7 manufacturers of infused products, 33 strategically located retail dispensaries, and a state-of-the-art manufacturing, research and development lab that represents Colorado’s first and only active cannabis research license in the state.
That sets up the technical confrontation we see on the charts this week: Ichimoku trend buy signal is coming in confluence with the long term uptrend line dead on the money.
~$170 million combined revenues next year... Trading at ~$120 million mkt cap now... its almost like free money - you can buy access to that revenue at a discount because this company is/was unknown and actually requires some research to comprehend the extraordinary circumstances of their "growth"... "growth" meaning this was all hashed out as HB 19-1090 was discussed - yet each company remained independent... thus the typical M/A risks are mitigated and this is not *nearly* as "speculative" a buy as it would appear/the market has priced in... even if you think the numbers are inflated/want to be conservative (note CO is often used as a reference for cannabis legalization success... may bring in MORE as synergies come into effect)... not so many opportunities out there that trade less than sales, would be like buying Apple for ~$40 today - the chances of this staying anywhere near this mkt cap are rather slim... however unlikely, the buyout price would be an absolute windfall... almost like free $$$$$.