Halo Collective (OTC: HCANF) (NEO: HALO) brought 2021 to a strong close, reporting an explosive 800% YOY growth in Q3 EBIDTA. Much of this success can be chalked up to the company’s rapid increases in sales figures over the year, with their cannabis product sales skyrocketing to levels more than six times those of Q3 2020. These numbers are impressive even for firms operating at a small scale, but they tell an entirely different story about Halo Collective. Halo is ranked #1 in sales to dispensaries in Oregon and its well-established presence across the United States and in Canada, Europe, and Africa.
These figures demonstrate impressive growth in sales, but that’s not all $HCANF has in the works for the coming quarters. The company doesn't just distribute cannabis products; Halo Collective boasts a robust, vertically integrated business strategy. The company manages all steps of producing and selling cannabis products, including cultivation, manufacturing, distribution, and retail sales. Halo Collective has over 70 product lines actively traded, comprising hundreds of individual SKUs that meet demand across different products, price ranges, and locations. That's not even to mention the company's additional products in its pipeline leading into the second quarter of 2022.
With such a sturdy framework for growth in place and such promising financial figures from 2021, it’s hard to believe that Halo Collective is currently trading at a fraction of its price from this time a year ago. Indeed, it's no secret that 2021 was difficult for firms in the cannabis industry, especially with demand plummeting in Oregon and California, two of Halo's largest markets. However, what matters most to investors is a company that can survive a market downturn like this one and come out even stronger. That’s why Halo Collective’s current valuation presents a tremendous opportunity for savvy investors.
Video Link: https://www.youtube.com/embed/YlJ24QIWDrI
Cornering the Cannabis Market from All Angles
Halo Collective’s strengths start at the beginning of the production cycle for cannabis products: cultivation. The company boasts 575 acres of licensed cultivation land, making up one of the most extensive growing operations in the world. These licensed growing plots are spread across indoor and outdoor locations in Oregon and California, as well as Lesotho, Africa. With such a substantial growing operation under its belt, it comes as no surprise that Halo has built up its product portfolio to outperform other cannabis product retailers across several continents.
And Halo Collective's extensive cultivation network isn't the only impressive part of its vertically integrated business model. The company also owns more than 20,000 square feet of manufacturing space with several licenses to produce a range of cannabis products. This makes it possible for Halo to constantly improve its already impressive product portfolio. In fact, the company recently announced that it plans to add 50 product lines in the coming quarters, from standard cannabis products such as medicated gummies and cannabinoid concentrates to innovative functional mushroom products that are poised to break Halo into a new and burgeoning market. Peer companies like Red White & Bloom Brands Inc. ($RWBYF) and 4Front Ventures Corp ($FFNTF), who are also trying to rebound from a tough 2021, are doing their best to recapture market share losses. Thus, with a competitive landscape that is formidable, attacking other segments is a wise consideration. Halo Collective is.
The even better news for Halo Collective's investors is that it has the distribution network to back up its production. Halo has partnered with Nabis, a wholesale cannabis logistics platform that supplies almost every cannabis dispensary and delivery service in California. This partnership is made even more significant when considering that California is the largest market for cannabis in the entire United States. This market is already sizeable but is only expected to grow. In fact, by the year 2025, the U.S. cannabis market is expected to reach $35 billion. The bottom line for investors is that Halo Collective's products have incredible penetration in the most critical demands in the industry, and the company's growth shows no sign of stopping now.
Developing an Unmistakable Brand in a Competitive Industry
As a matter of fact, Halo Collective's penetration of California's cannabis market goes beyond its partnership with the state's most prominent cannabis logistics platform. Beyond simply supplying other dispensaries and delivery services, Halo has opened its own brick-and-mortar dispensaries in the heart of the United States’ most active cannabis market. The company’s first dispensary sits within two miles of UCLA, serving a prime demographic of young students. Additionally, FlowerShop serves high-end cannabis products to consumers in Hollywood. Halo Collective even secured a product line sponsored by the highly successful California artist G-Eazy, solidifying Halo’s brand even further in a market of copycats.
Halo Collective has secured some great partnerships to bring awareness and reach to their products, but these strategies rely on a stream of innovative, high-quality products to work their magic. Luckily, Halo has these products in spades. Rather than limit itself to traditional cannabis products, the company continues to develop new technologies to usher in demand from new demographics. Some examples are Accu-Dab, a cannabis extract vaporizer that allows users to choose a preset dosage, and Nasalbinoid, a technology that enables the consumption of cannabis extracts through a nasal inhaler. In addition to these front-facing consumer technologies, Halo is also developing CannaPOS, a point-of-sale software specifically designed for the cannabis industry, and a novel method of cannabinoid filtration that would chemically purify cannabis extracts for increased potency and consistency.
While this is promising news, Halo Collective is penetrating more than just the recreational cannabis market in the United States. The company also has a foothold in the expanding cannabis market in England, supplying both CBD-infused wellness products and regulated cannabis products for medical use. This presents a considerable opportunity for Halo, as projections show that the company's products could serve as many as 340,000 patients in England in the next two years. This is an excellent point when considering that the European cannabis market is expected to boom to $37 billion by 2027. With a vast array of promising developments under Halo's belt, the company's 28% YOY growth in revenues from Q3 2021 comes as no surprise. If Halo Collective keeps this up, which seems highly likely, investors can expect to see much larger returns from future reports.
Leading the Charge in a New Industry
Though Halo Collective has shown tremendous promise for the future of its dealings in recreational and medical cannabis markets worldwide, the company's ambitions don't stop there. One of Halo’s recent developments with partners Nightingale Remedies and PeakBirch Logic is Hushrooms, a non-psychoactive functional mushroom product line for wellness. The product line includes several formulations of mushrooms with cannabinoids with effects ranging from focus-enhancement to relaxation, as well as additional benefits such as antioxidant and antibacterial.
However, this is only the beginning of something bigger Halo Collective has in store for the future. At the end of 2020, Oregon legalized psilocybin, which has accompanied significant interest in the applications of the mushroom’s psychoactive compounds. As a matter of fact, therapy centers that utilize psilocybin's psychoactive compounds are expected to open next year, and Halo Collective has its sights set on capturing the market early. The company is currently engaged in developing a legal therapeutic framework for the compounds. If Halo Collective’s current ventures are anything to go on, investors may be seeing significant returns from these developments sooner rather than later.
An Auspicious Proposal for a Low Price
All in all, Halo Collective appears to be well-poised not only to continue on its current trend of meeting skyrocketing demand in cannabis markets across three continents but also to break into the therapeutic psilocybin industry at its inception. The company’s financial statements tell a powerful story, with Halo having posted YOY sales growth of more than 600% in its Q3 2021 report. Especially given the sheer size of the markets that Halo is serving, it remains a mystery how a company can post such encouraging results while trading at a price level so much lower than its history suggests.
With all of these factors taken into consideration, it seems as though Halo Collective’s current stock valuation doesn’t do justice to the promise the company has demonstrated, offering what could be a golden opportunity for investors to get in on the ground floor of a company destined for growth. However, especially considering the projected growth of the industries Halo is serving, the company’s valuation may not remain so low for long. As a result, Halo Collective presents not only a highly favorable proposition to potential investors but potentially a short-lived one.
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