Why Is Sundial Growers INC. A Good Buy?

Sundial Growers Inc. (NASDAQ:SNDL) engages in the production, distribution, and sale of cannabis products for the adult-use market. It is also involved in the production, distribution, and sale of ornamental plants and herbs in the United Kingdom. The company offers its products under the Top Leaf, Sundial Cannabis, Palmetto, and Grasslands brands.

Sundial Growers Inc. is benefiting from three upbeat factors. Sundial Growers stock, like other marijuana stocks, might have a brighter future due to Biden’s stance on the sector. SNDL ranks as one of the most talked-about cannabis stocks around right now.

The company itself is very transparent; quick google searches of their website Reddit users have helped make Sundial Growers a red-hot pot stock in 2021. SNDL appears interesting based on the technical chart.

With the current crash of pot stocks, Sundial will be able to scoop a few of them at a low price, restructure the costs and capture synergies; it is the same playbook that many industries have followed over the years.

In February, some folks were calling it a Robinhood stock, or a Reddit stock. That’s because the stock was heavily traded among retail traders, and because it was the topic of conversation among some users of r/WallStreetBets. Admittedly, SNDL stock went too high, too fast. On the other hand, buyers proved that they’re capable of bidding the share price up to the $6-$7 area.

In recent months, Sundial has made a $52 million debt investment in Zenabis, another $22 million debt and equity investment in edibles company Indiva and has formed a JV with private equity firm SAF Group.

With access to $100 Million (Canadian) via SunStream and  with $600 Million (Canadian)  in savings and  no debt on the balance sheet Sundial can be a notable player in industry consolidation efforts and would look to see capital deployment in international markets including the US as global regulations continue to move in favor of cannabis reform.”  The company is expected to pour $100- $200 million into a “special opportunities fund.”

Sundial Growers also announced that it has increased its commitment to SunStream Bancorp Inc. (“SunStream”) to $188 million from its previously announced commitment of $100 million. SunStream is a joint venture between Sundial and the SAF Group that will leverage a strategic financial and operational partnership to target asymmetrically enhanced risk-return opportunities in the cannabis industry to provide exposure to a portfolio of attractive debt, equity and hybrid investments

The fundamentals of SNDL are on point. And with the recent offering they will have 700 million dollars in cash on hand and they have no debt. We are to be informed of a merger or acquisition in the next 35 days. There’s also legalization in the works. This stock might be taking a beating run, it will not be for long and the ones that hold through will reap the benefits. Same happened with MARA which was at $2 end of 2020 and now it is at $50.

Sundial Growers Inc. (NASDAQ: SNDL) (“Sundial”) and Inner Spirit Holdings Ltd. (CSE: ISH) (OTCQB: INSHF) (“Inner Spirit”) have also entered into an arrangement agreement (the “Agreement”) pursuant to which Sundial will acquire all of the issued and outstanding common shares of Inner Spirit for total consideration of approximately $131 million (the “Transaction”). The combined company will continue to focus on providing quality cannabis to consumers through a responsible and disciplined approach while creating enduring value for shareholders.

Under the terms of the Agreement, Inner Spirit’s shareholders will receive, for each Inner Spirit common share held, (i) $0.30 in cash and (ii) 0.0835 of a Sundial common share (representing $0.09 per Inner Spirit common share based on the 10-day volume-weighted average price (“VWAP”) of Sundial common shares on the Nasdaq Capital Market), for total consideration of $0.39 per Inner Spirit common share.

The purchase price of $0.39 per Inner Spirit common share represents a premium of 54.8% to the 10-day VWAP of Inner Spirit common shares on the Canadian Securities Exchange (the “CSE”) and a premium of 62.5% to the closing price of Inner Spirit common shares on the CSE on May 4, 2021. The Transaction has been unanimously approved by the Boards of Directors of Sundial and Inner Spirit and is expected to close early in the third quarter of 2021.

In just over two years, the Spiritleaf retail network has grown to become Canada’s largest single brand retailer with 86 stores operating in British Columbia, Alberta, Saskatchewan, Ontario, and Newfoundland and Labrador. Spiritleaf’s franchised and corporate stores have created deep ties within their local communities and served 2.3 million guests in 2020.

The retail brand has earned a reputation as a knowledgeable and trusted source of recreational cannabis while offering a premium consumer experience. Spiritleaf opened its 86th store on April 28, 2021 in Edmonton, Alberta and is projected to exceed the 100-store milestone in the summer of 2021.

Sundial Growers Inc.  and SAF Opportunities LP, a member of the SAF Group (“SAF”) recently announced they have entered into an agreement to form a 50/50 joint venture (the “Joint Venture”) through a new corporation, SunStream Bancorp Inc. (“SunStream”).

The Joint Venture will leverage a strategic financial and operational partnership to generate asymmetrically enhanced risk-return opportunities in the cannabis industry to provide exposure to a portfolio of attractive debt, equity and hybrid investments. The Joint Venture will focus on cannabis-related verticals, seeking both Canadian and international opportunities and investments.

The Joint Venture’s first mandate is the formation of a special opportunities fund with commitments from third party limited partners alongside an initial commitment from Sundial of $100 million. The Joint Venture expects to pursue additional potential mandates, including a Canadian SPAC and other investments.

Global Cannabis Sales Exceeded $21 Billion In 2020; Forecasts $55.9 Billion By 2026. CWEB Analyst’s believe that Sundial is positioned very well against its competitors and will invest heavily in the US by merging or buying other companies. Sundial (SNDL) could see an upside of $4-$6  by 2021. 2022 will be extremely profitable for the Cannabis industry and Sundial could be a good investment to hold for a long term value.

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