Schwazze SHWZ stock is a cannabis stock that will light up the board when cannabis stocks take off. And, SHWZ is on of the best cannabis stocks – My Top pIcks. I wanted to solidify the SHWZ stock forecast because the company has expanded so much, so rapidly over the past several months. Right now, Schwazze has some 29 dispensaries but, they should close on an additional 10 more this year. That being said, the SHWZ stock forecast will be obsolete immediately as more revenue potential shows up quickly.
I will continue to update SHWZ stock forecast as the quarters progress; something I have been getting far more efficient at over the past few weeks and months. That being said, I want to reiterate that these models are exactly that, models. Investing is also a popularity contest. And, just as equally that cannabis stocks can be unpopular and undervalued, very soon I expect that these same cannabis stocks will be over-popular and over valued. Do the math accordingly with the SHWZ stock forecast.
Now, let’s dig into even more big opportunities:
Another of my Top Picks is Lowell Farms LOWLF stock. Lowell finds themselves with a new strategic partnership where Shwazze will be selling Lowell Farms products in their dispensaries. Schwazze will grow, process, and sell Lowell Farms pre-rolls. This is big for both Schwazze and Lowell Farms as Lowell puts out an excellent product.
The thing with Lowell Farms is that it has such a huge social media presence. The way you get a big social media presence is that a lot of people talk about your products. I am not one who looks to product quality or my likes or dislikes because what I like may not be an effective product to sell. I let the dollar votes take care of that side of the business. If the masses like a product, that tells me that a lot of people have “voted” and the product will ultimately be a success versus other products.
That being said, Lowell will be big from this. Lowell Farms also has a deal whereupon Ascend Wellness AAWH stock, sells Lowell products in its dispensaries and, without lifting much of a finger, Lowell Farms continues to get a cut of the profits. Lowell will likely continue to do what it does exceptionally well… social media marketing, of course.
These types of deals benefit in many ways and the fact that branding and marketing are taken care of by Lowell. And, both Schwazze & Ascend Wellness get a top-quality brand that they can sell in their stores. And, production of this is done inside facilities that are already licensed. Capacity utilization increases for Schwazze & Ascend Wellness, and that means better margins for both of these companies.
And… that could lead into an interesting M&A deal into the future.
SHWZ Stock as an Acquisition Target
Shwazze has done an absolute bonanza of M&A activity the past year; 2021. I expect that pace will continue. Schwazze is now a regional MSO and one of the biggest if not the biggest in both Colorado & New Mexico. There are other deals that will follow through this year coming, and the pace looks dizzying.
I have said many times that there is going to be an absolute ton of M&A activity over the next several years in cannabis stocks. We continually see this. And, we also see strategic partnerships occur all of the time; Lowell Farms deal is one example.
That being said, I fully expect that Schwazze to continue with its M&A activity and I expect they will grow and develop along with that.
But, I also suspect that a far bigger player could easily step in and make them an offer they cannot refuse. What if, and this is purely hypothetical, what if Trulieve were to show up and decide they finally wanted to be in both Colorado & New Mexico? This is easy.
If not Trulieve, why not Ascend Wellness? Or, TerrAscend?
To give you an idea of how big I expect M&A activity to be in the next several years, I currently have 108 cannabis stocks that I follow on Cannabis Investing Newsletter. Within about 24-30 months, I can easily envision there being only about 75 left standing.
I can see M&A activity happening both ways with Schwazze. Investing in SHWZ stock should mean you both accept further growth and expansion with new acquisitions, as well as the possibility that someone very big steps in and acquires SHWZ stock.
Schwazze SHWZ Holdings Financial Data
Numbers were good for Schwazze and the company continues to grow. Expect that as the recent acquisitions and deals solidify you will see continued increases in revenues and big moves maybe up or down with margins and costs. But, ultimately, I think this is a company to be reckoned with.
Schwazze Gross Profits
While Schwazze printed record revenue for the quarter, the big gains lately were driven from M&A activity. We will see even more gains as the newly flipped to adult-use state of New Mexico will see increases in revenue at existing dispensaries. This is something I like to key in on because this is organic growth that existing dispensaries will receive without new input costs.
As for gross profits and gross margins, Schwazze needs to generate more profits from gross margins. But, if there is one thing I have learned after reviewing cannabis stocks for some time, growing excellent cannabis, inexpensively, and consistently is difficult. Still, other cannabis stocks have achieved this.
This becomes the slingshot that propels SHWZ stock. As Schwazze grows into its foundation, they will get better and better. If there is an increase in revenue of about 50% from organic growth at existing facilities, and Schwazze can improve gross margins at the same time by about 10%, this will drive profits. That, in turn, will drive SHWZ stock over the long term. So, look toward this metric as the rationale for what will help drive SHWZ stock. As gross margins increase, so will profits. That will attract more investors.
Schwazze Operating Profits
One of the things that I have been curious about is the State of Colorado. Colorado is one of the most mature, if not the most mature cannabis adult-use legal state there is. How much more growth will we see out of the state of Colorado? This is the one thing that I wonder because it really tells the story of what will happen in all of the other states over the next few years.
If there is enough continuous growth in Colorado, this will propel revenue higher for the cannabis companies in that state. That will enable the rationale for operating costs at the levels they are now. So, if companies can continue to grow in these more mature states, this will help push revenues. I am using this as a measuring stick for Schwazze; this is important.
It is important to note that there was a large surge in cannabis sales with COVID as bars were closed and people consumed cannabis at home. Bars are now reopening and we have seen revenue declines in cannabis sales across the board. Expect moderation and mellowing out of these numbers, but eventually, cannabis revenue sales will resume higher again, albeit at a slower pace.
Schwazze EBITDA & Net Profits
Profitability picture here for Schwazze will continually change as Schwazze evolves. There will be changes to the SHWZ share count with new acquisitions. I will be continually updating the SHWZ stock forecast as new developments move forward.
For now, the lower EBITDA/Revenue rate is likely to see moves back upward. I used. modest EBITDA/Revenue rate and increased this slightly every year with the SHWZ stock forecast below.
Schwazze Cash On Hand
One of the things I look toward with these growing and expanding companies is their capitalization and how well any one cannabis company is with cash on hand. Schwazze is expanding with new dispensaries being acquired. These M&A deals require cash to fund. Also, if Schwazze is taking on a cannabis company that is not profitable, cash will be needed to fund future operations. Schwazze has plenty of cash on hand, and they would have no problems accessing capital if there was a deal needed to be done which required more cash.
I look toward the new additions throughout this coming year to see what shape Schwazze will be in with margins and net earnings. The expansions are likely to add to the bottom line eventually. There are expansions where acquiring dispensaries throughout Colorado will enable exist labels to be sold in new dispensaries, expanding Schwazze’s foundation and driving SHWZ stock.
The long term buildup of what Schwazze is putting together will mean bigger revenue & profit potential down the road. An investor would need to look at Schwazze as a long term opportunity for a growth stock and value investment.
For now, Schwazze has plenty of cash on hand.
Schwazze Total Equity
I always look toward total equity as that metric that tells me if management is creating value for me. From previous acquisitions, there have been increases in total equity. But, increases in total equity that come from acquisitions from all-stock deals come at the expense of more shares. What we would be looking for are organic increases in total equity and they continuously move higher and higher with static share count.
Nonetheless, Schwazze is increasing its foundation and this will be supportive of future revenue and profits. Equity is what drives a company’s ability to create revenue, and by extension, profits.
Still, with as many deals in the future as Schwazze has, and with the industry expanding as it does, Schwazze is going to continue to grow and SHWZ stock will push higher over a very long period of time.
Schwazze SHWZ Stock Forecast
Schwazze SHWZ Stock DCF
The first thing I did with the SHWZ stock forecast was put together the revenue run-rate. I looked at several different analyst projections and they all seemed to target a certain amount over the next two years. I used a progressive approach.
Then, I took current margins and gradually increased them over the course of the next five years. Then, I lowered them because I felt the number came in too high.
But… and I stress this: Everything is obsolete. This is not a bad thing. This is owed to the fact that Shwazze is expanding and the new numbers will come in and I will need to make adjustments to the SHWZ stock forecast. I will do so as these metrics come in over the next few quarters.
But, this working model gives a solid foundations to work with in understanding where SHWZ stock could be.
Is Schwazze SHWZ Stock A Good Investment?
First, I obviously like SHWZ stock because this is a company that has tremendous upside potential. And, with the fact that a lot of cannabis stocks are beaten down so heavily, this is an opportunity to really take advantage from a long term perspective, as value investors.
If a value investor were to look at this company as an undervalued cannabis stock, that is also simultaneously a growth stock, getting involved in SHWZ stock at this level makes a tremendous amount of logic.
At the same time, the days of hyper-stock spikes in cannabis stocks are behind us. Don’t expect that to occur any time soon… except, that probably is not true, either. Cannabis Federal Legalization is just around the corner as the Senate version of this bill is likely to hit sometime soon. So, very likely, cannabis stocks will see a continued move upward very shortly.
Then, my expectation is that as cannabis companies start drifting toward up-listing on Nasdaq, this will draw in more and more investors with far bigger dollars, continually driving up and supporting cannabis stocks.
I see an investment in SHWZ stock as a long term opportunity for value investors looking for high growth stocks that are significantly undervalued.