Why Simply Solventless Concentrates is a Top Pick for Cannabis Investors

Simply Solventless Concentrates Ltd. (TSXV: HASH) focuses on producing high-quality, terpene-rich solventless concentrates for the Canadian cannabis market. Their product range serves recreational, medical, and business-to-business markets, emphasizing purity and natural extraction methods. This approach aligns with consumer demand for cleaner cannabis products, positioning SSC as a noteworthy player in the industry.

Why We Like The Stock

Simply Solventless Concentrates Ltd. has several strong points that make it a super promising investment opportunity:

Steady Financial Growth

SSC has shown strong financial performance with six straight quarters of net income profit. In 2023, they reported $7 million in revenue. By the end of 2024, they project impressive growth to $40 million in annualized revenue and $6 million in net income. This growth demonstrates their ability to scale operations effectively while maintaining profitability.

Strategic Acquisitions

SSC’s acquisition strategy aims to strengthen its market position and expand its product offerings. In January 2024, SSC acquired Lamplighter, followed by the acquisition of CannMart Inc. These acquisitions are set to significantly boost SSC's market share. The CannMart deal alone is expected to increase their revenue by approximately $20 million, with no additional long-term debt.

Operational Efficiency

SSC recently decided to bring hydrocarbon extraction in-house to increase efficiency and reduce costs. This move is expected to improve their gross margins from 25% to 34%, leading to annual savings of over $1 million. The investment in extraction equipment is projected to pay for itself within nine months, which shows the smart planning and foresight behind this strategy.

Strong and Expanding Product Line

SSC offers a variety of high-quality cannabis concentrates through its well-recognized brands, such as Astrolab and FrootyHooty. The company's focus on solventless extraction methods ensures its products meet the high standards expected by both recreational and medical users. These products have gained considerable market traction, ranking among the top in several provinces. This brand strength is key to SSC’s market presence and revenue growth.

Risks & Considerations

While SSC has impressive growth prospects, there are a few things to keep in mind. The cannabis market is highly competitive and constantly changing, which means SSC needs to keep innovating to stay ahead. This requires ongoing investment in research and development. Also, integrating new acquisitions like CannMart also presents challenges. Making sure these new additions fit well with SSC's operations is crucial for their success. Lastly, navigating the regulatory landscape in the cannabis industry can be tricky, so SSC obviously needs to stay adaptable and compliant with all legal standards.

‍Sources: Information has been sourced from Simply Solventless Concentrates’ official website, investor presentations, and recent press releases.