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Emblem Corp (Canada:EMC) has all the makings of a major cannabis success story.
It is guided by the leadership of an experienced medical leadership team.
It has spent years building its fundamental business structure up to the point it can go public.
And thanks to the completed Initial Public Offering (IPO), it’s poised to start an aggressive growth strategy to meet the surging demand for recreational and medicinal cannabis use in Canada.
Here’s the full details.
The Emblem story really starts with the leadership team.
Emblem is led by a team of people perfectly situated to grow Emblem from a small producer into a leading player in the industry.
The company’s CEO is a securities lawyer and also the founder of a pharmacy in Canada.
The mix of those provides a unique position of expertise necessary at this stage in Emblem’s development. He also has personally invested more $1.3 million into Emblem.
The president of Emblem is a real estate attorney who invested more than $900,000 into Emblem so far.
The “Grow Master” in charge of operation of the cannabis farming operations, has more than a decade experience as a horticulturist and has developed award-winning organic growing methods.
Editor’s Note: Organic production is wildly important to the retail cannabis customer and the pharmaceutical customers as well. In other words, Emblem isn’t some small-time pot shop being run by a bunch of burnt out hippies.
It’s run by absolute pros.
And that’s an essential starting point for Emblem’s massive growth targets in the year ahead.
It's Just The Beginning
We talk a lot about the growth potential the cannabis markets in Canada and the United States.
We do that because so large.
Basically, the size of the Cannabis industry will have the same revenue of Google in five or six years.
However, today it’s generating about as much revenue as Google did more than a decade ago.
That’s massive growth.
Enough to propel an entire sector much higher.
However, when investing in individual companies, you have to pick those which are best positioned and working towards getting their piece of the rapidly growing market.
With Emblem’s IPO completed, the company aims to do just that.
Emblem’s production facilities are located in Paris, Ontario, right in the industrial belt between Detroit and Toronto.
It currently has 52 employees and they’re working away at building the company.
Now, there are all sorts of ways for cannabis producers like Emblem to make money.
There are pharmaceutical opportunities to provide high-grade cannabis products to the pharmaceutical development industry and to end users.
There is a big opportunity to create branded cannabis products to market to recreational users.
There’s also demand for specialty products like oil-based and food-based ones which, in some cases, are a bigger market than the traditionally smoked cannabis.
They’re all good and essential to meeting the market.
However, at this point in the industry’s growth cycle, we’re focusing on something a bit different.
We’re going to look at the simple, key number that will drive stock valuations for the time being.
That number is: how much cannabis can be produced.
Big production equals big value. And vice versa.
This is actually where Emblem really shines.
With the IPO now complete, Emblem has targeted expanding its cannabis production operations to a total of 11,600 kilograms of
production within the next year.
That’s massive.
Consider this.
The wholesale price for one gram of cannabis is about $5.00 (that’s a rule-of-thumb reference price).
That assumption makes each kilogram of cannabis produced worth about $5,000.
If Emblem hits it’s production target, that’s a total of $58 million a year in revenue.
That’s pretty big for a company which worth about $100 million (if it’s currently trading around C$1.50 per share).
To be honest, that’s a compelling value by itself.
However, it’s just part of the big opportunity we’re seeing in Canadian cannabis production.
“Licensed” To Print Money.
Beyond the revenues, earnings, production facilities and other fundamental factors, Seed Investor believes there’s a much more valuable asset than all of those put together.
The market does too.
You see, Canada is a setting the emerging cannabis industry up to be highly regulated.
As a result, the limited number of licenses for cannabis production (of which there are only a few dozen issued and not many plans for more to be issued) will be increasingly valuable in the years ahead.
Emblem has one of those licenses.
Emblem received its license from the Canadian government to both produce and sell cannabis in August 2015.
As a result of successfully completing this process, the company joins a small group of a few dozen producers with this license.
In other words, it’s a “Licensed Producer,” or an “LP.”
This is critical to the company’s future.
As an LP it’s at the heart of the marijuana boom.
It’s not some partially attached company with only some loose connection to the cannabis industry.
Over the last few months I’ve seen some “cannabis plays” include Microsoft (because it makes software), Scott’s Miracle-Gro (because of its inroads into indoor hydroponic plant production), and If you think that car industry is going to boom, you buy an automaker stock.
You don’t buy shares of a company like Bosch because it makes some electronics for cars that accounts for 8% of its overall revenues.
The same is for LPs in the cannabis stock boom.
The market has rewarded the LPs the most in the current stock boom.
The list of the few that are publicly traded is short, but all have delivered massive gains.
Organigram (OGI) is a Canadian LP. It was trading for 23 cents in October 2015. It is now C$3.30 per share as I write. A total gain of 1334%.
Aurora Cannabis (ACB) is another Canadian LP. It has soared from 40 cents to C$2.01. A total gain of 403%.
Aphria (APH) is another Canadian LP. It’s shares have jumped from $1.20 to $5.13. A total gain of 327%.
Canopy Growth (CGC) is yet another Canadian LP and is the best example of how big and fast and LP can grow even at these earliest stages of the cannabis boom. It’s shares have exploded this year from $2.40 to $10.00. A total gain of 316%.
That’s a lot of money in a very short period of time.
Emblem is poised join the ranks of those companies in the next few months.
If the company’s management team can deliver on its targeted growth plans and the cannabis industry keeps growing like it has been, Emblem sure will be another major Canadian cannabis success story.
Investors looking to get into cannabis stocks should definitely be looking at Emblem right now.
Find more information at Emblem’s web site: http://emblemcannabis.com/
Best regards,
–Editor
The Seed Investor
Note To U.S. Investors: At the time of this writing, there was no U.S. symbol for Emblem.
However, many full-service and discount brokerages offer direct trading in foreign stocks.
If you are interested, call Etrade, Ameritrade, or whatever broker you have and they should be able to help you out until there is a US trading symbol.
Disclaimer:
Seed Investor was established to provide investors research research and information on the rapidly-growing cannabis market.
All information contained in this report is based off information obtained from news outlets, public filings, and other publicly available information sources about the cannabis market and the companies featured in this report.
Seed Investor is not an investment advisor and in no way should be considered an personalized financial advice.
Seed Investor has not been compensated for the production or distribution of this research.
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