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i believe one of the most important things when investing in a company is first understanding what the company's underlying business does now there's been a company that i've been eyeing in the last couple months however i've held off because i felt like it's a little bit too speculative and i never had experience with it firsthand well today that's all about to change i figured you know what why don't i go out and check it out for myself to really understand if this company could be a good long-term investment so that's what i'm going to do i'm going to take you guys with me to go ahead and check it out now the company i'm talking about today is juchi and i'm going to be going to the only retail store in california so with that let's go check it out [Music] [Music] [Music] [Music] [Music] do [Music] so let's first talk about why we should be looking into this industry and why i think it's a really attractive opportunity to get exposed to this industry now late last year the house passed a bill to decriminalize marijuana setting up steps to wipe out convictions now the bill passed was to decriminalize marijuana at the federal level now this marks the first time the house has voted to remove cannabis from the federal controlled substances act and this legislation also provides provisions to boost entrepreneurship in the legal marijuana businesses so it's a direct boost to proven players already in this industry now more states nationwide are starting to legalize it for recreation or medical use 15 states have now legalized the substance for arizona montana new jersey and south dakota did so during the 2020 election alone 36 states have already authorized marijuana for medical use we can clearly see that this trend is towards legalization and with over half of the states already allowing it for medical use i can definitely see this becoming fully legal in all 50 states for medical use in the near future now looking at the growth of the u.s legal cannabis industry it's clear that they're seeing very strong growth at 18 compound annual growth rate from 2019 to 2025. last year they did about 19 billion dollars and this year they're projecting it to be around 24 billion dollars now last year despite social economic disruptions amid the kova 19 pandemic the total legal cannabis market saw rapid growth from 13 to 19 billion so seeing an industry that's still in its early innings and that's projected to grow rapidly over the next decade i clearly see this as a great opportunity to get some exposure to this fast-growing industry now i originally learned about jushi after looking into this industry as a whole and juichi stood out to me because i had the highest annual revenue growth among this whole entire crowd now jushi is a us cannabis company with high-end retail locations premium brands and state-of-the-art facilities they're a vertically integrated multi-state cannabis company led by an industry leading management team now juicy currently has 16 open stores and has 16 stores to be opened soon they currently have three cultivation plants as well as four extraction and processing facilities now they're seeing very strong sequential revenue growth in the second quarter of 2020 they're doing only about 15 million however in the next quarter they saw about 25 million now in q2 of 2020 they're only doing about 15 million dollars in revenue however in the next quarter they did about 25 million dollars in revenue the quarter after that they're forecasting that number to be around 32 to 33 million and the quarter after that to go as high as 40 million so this company is growing very rapidly they also have a very solid balance sheet as they've been able to raise a lot of capital and currently have a lot of cash and marketable securities now juchi is a multi-state operation and they have a national footprint we can see that they have some business in california and nevada however they're primarily located on the east coast with four dispensaries in illinois 10 in pennsylvania and one in virginia now the great thing that i like seeing is that they have eight new dispensaries opening in 2021 in pennsylvania and five opening in virginia with that let's dive into some of their numbers now beyond hello is one of their flagship brands and they've been able to drive online revenue growth through the best-in-class customer experience now looking around april and may all the way to december 2020 they've seen amazing growth on their online business side online sales were up 180 with conversion rates over 100 percent website traffic above 200 percent and new daily customers to be around 615. now right now gucci's seeing very strong sequential revenue growth and their forecasts for revenue and adjusted ebitda look really good now for q4 of 2020 they're forecasting around 32 to 33 million in revenue with adjusted ebitda to be positive 2.5 to 3 million looking for the whole year of 2021 the revenue is projected around 200 to 250 million with adjusted ebitda around 40 to 50 million so we can clearly see that they're projecting very strong revenue growth as well as already positive earnings which for a company in the space that's also still in its early innings is really good to see so now i wanted to dive in to the third quarter 2020 financial results the third quarter revenue increased 67 percent quarter of a quarter to 25 million the gross profit increased 64 sequentially quarter over quarter to 12.3 million and they also increased their fourth quarter 2020 outlook now they saw a net loss of 30 million however adjusted their ebitda was 1.9 million now some of the recent developments that stood out to me was that in november 2020 they announced their plans nearly double the square footage of its pennsylvania grower processor facility in scranton pennsylvania to more than 160 000 square feet in a phase expansion which will nearly triple its canopy space to approximately 98 000 square feet now the first phase is expected to come online mid 2021 with the final phase to be completed in q2 of 2022. now the ceo of juxie said jushi delivered another outstanding quarter generating revenues at the high end of our previously provided guidance range and achieving adjusted ebitda profitability for the first time in the company's history it's clear to see that juxie's plans for growth and profitability have been paying off i believe juicy can clearly be a profit beast now looking at their financial results for the third quarter they saw about 25 million in revenue 12 million of that being gross profit so you're probably asking okay so why is the net loss so high well the 21 million increase in net loss in the third quarter was driven primarily by the increase in the derivative warrant liability prompted by the rise of the company's share price partially offset by net gain on a business combination higher revenue and gross profit so because the stock price rose and they offered the warrants two shareholders they just had to be able to pay up to the shareholders for holding their stock now taking a look at their balance sheet the company had around 36 million in cash as well as 7 million in short-term investments meaning that their total current assets were 63 million and current liabilities of 61 million this means that the net working capital at the end of this quarter was 21 million they also received approximately 29 million equity financing round so you can think of it when the company announces that it's going to sell stock on the public market they're essentially trying to raise more capital to be able to fuel growth for their business so this brings their total up to 73 million which means that they're fully funded for the build out of the current portfolio and they have excess liquidity to pursue opportunistic acquisitions and what this really means is that they have a lot of cash on hand to be able to go out and acquire new companies and to further invest in their business and their growth plans and lastly we talked about them increasing their fourth quarter 2020 revenue guidance which was originally 25 to 30 million to now 28 to 30 million and they expect their adjusted ebitda to to be between 2.5 and 3 million they're also maintaining their 2021 full year revenue guidance which is great to see that they're navigating really well in this pandemic environment i also wanted to talk about the company culture and management and i think it's really important to look at this when evaluating a company that's still in its early stages and with joushi still being under 1 billion dollars in market cap there's a lot of risk so i want to look into this a little bit further now this article came out just on february 9th 2021 so not even a few weeks ago and it says number five best cannabis companies to work for jushi serves its employees with purpose yushi guided its employees through the height of kobe 19 with daily calls across all operations which helped the team building and playing an integral role in the company's 2020 growth now in june now in june 2019 they opened their first beyond hello branded retail location and ended that year with approximately 200 employees six medical dispensaries and one cultivation facility since then the company has expanded to 16 retail locations and three cultivation facilities with plans to open 10 to 12 additional retail locations in one processing facility by the end of 2021 they credit its employees and the company's efforts to ensure the needs are met their voices are heard and that they feel valued and comfortable in the workspaces especially when the health concerns were top in mind for staff for how the company managed to grow exponentially during a pandemic so it's really great to see that they have a great culture and that they really value and care about their employees they're really taking care of people from the customers all the way to their employees and with any good business that's what you'd like to see now their vp of hr says you can't just be a great place to work when you have multiple locations you have to be great places to work and you cannot do that unless you have good managers in place we really like to make sure that we're putting employees experiences in the right people's hands and that the people who are leading our stores or facilities are the right leaders now when you look at juicy on glassdoor they only have about 14 reviews so it's very small sample size however just looking at the numbers they're rated exceptionally with 4.7 out of 5 stars 89 recommend to a friend and 87 approve of the ceo now their ceo is james caiopo and i really like his background he's the co-founder chairman and ceo of jushi and it's always good to me to see a founder-led company now he graduated from harvard business school and he's been an experienced ceo of several companies that have grown from fast startups to large businesses now before founding joushi he was a managing partner at one ease partners and before that he was a president of sando asset management for about six years so he really knows what he's doing within this finance vertical and has a leadership experience to be able to bring a company to scale so with all that let's talk about where juichi is trading right now so jushi is currently trading at eight dollars a share and we can see that it's had an amazing run up from about two dollars in august of 2020 to about eight as of february 16 2021. now juichi is still a very small company as it has a market cap of 900 million dollars so it's under 1 billion dollars we can see it's trading at a price of sales of 14 with a price to book at 15. now simply wall street claims that their current share price of eight dollars is 58 undervalued from their favorite value around 20 now i wouldn't say that's completely correct however if we're looking on a long term basis three to five years out i definitely do think that might be the case now taking a look at the earnings and revenue growth forecasts now we're still in the early stages of joshi's growth story as at the beginning of 2021 the revenue is about 80 million with earnings to be negative 58. however next year they're actually projecting positive earnings with a significant growth in the revenue of 220 million projecting it out to 2024 they can see this number to be 423 in revenue and 74 million in earnings this translates for their annual earnings growth to be 71 percent and their annual revenue growth to be 43 so with the company growing so rapidly and already hitting adjusted ebitda profitability we can see as usual continues to scale they'll continue to be a profit beast as they have a lot more money coming into their business now even after this nice run up from late last year to where it's at right now juchi is still in its very early innings and i believe with their proven experience and strategic execution jushi is actually undervalued to its future growth potential i think we can easily see juicy grow to a three to five billion dollar market cap within the next three to five years as this company is going to have significantly more cash flow running into their business well there we have it guys we talked about the company their financials and their long-term growth opportunity on top of that we actually went to their only retail store in california to go ahead and see it for herself now i think gucci is doing a really good job differentiating themselves in this crowded market as they're really trying to become a premium and luxury brand now juicchi's management team has done a really good job bringing in an experienced board and they've already made significant progress in their business strategy to continuously expand into different markets i really like josh's positioning here and i think with them sitting only under 1 billion dollars in market cap i think there's significant room for them to grow now as we all know one of biden's initiatives is to decriminalize mj and with the house being a democratic majority i think there's going to be a substantial push towards making this a reality now juichi has been going very rapidly in the past few quarters however it's been incurring pretty substantial net losses so i believe it's really important for you to understand that this is a high risk high reward play i believe this decriminalization tailwind is going to be really impactful and i believe juchi is ripe for a lot of growth in this coming decade so what am i going to do well i'm sure you guys can already guess but i built a position in this stock now since this is a very early stage in high growth stock i'm starting to evaluate this company on a forecasted basis so i'm trying to look two to three years out now with this company being under one billion dollars and them already having a run rate of around 100 million it puts them around a price to sales around 10. now i believe if you she is able to continue to execute on this growth plan i can definitely see their annual run rate to be around 200 to 300 million by the end of 2023 so i believe at these prices today it's actually pretty undervalued and it would be a good time to build a position so that let me know in the comment section down below what you guys think about this company as well as what you think about this stock now i know i did a different format and i threw in some b-roll in it too so i hope you guys like it i know it's kind of different but i had a lot of fun with it so i hope you guys like it with that guys thanks as always i'll see you in the next video and let's go get that bag