Strategic Investment in Edibles Adds Value to Sundial Growers

If you’d like to invest in the cannabis sector, it’s important to bear in mind that this is an expansive category. One noteworthy cannabis sub-category is edibles, but Sundial Growers’ (NASDAQ:SNDL) brands haven’t been heavily focused on edibles. Therefore, it might appear that SNDL stock isn’t a good way to take a position in the edibles category.

marijuana stocks Hand gently holding rich soil for his marijuana plants
Source: Jetacom Autofocus / Shutterstock.com

However, a recent news item indicates that Sundial is looking to change that. Indeed, SNDL stock could prove to be a meaningful entry point into the cannabis edibles market for investors.

Therefore, if you’re going to own SNDL stock, it’s important to investigate the growth prospects of the edibles niche. Along with that, you’ll want to learn the details surrounding Sundial’s investment in this category.

Investors should also analyze the price action of SNDL stock, which has been eye-catching, to say the least.

SNDL Stock at a Glance

In late October, the bulls seemed to be taking a nap as SNDL stock just wasn’t showing signs of life. Alarmingly, the SNDL share price reached a 52-week low of around 14 cents on Oct. 30.

As it turns out, however, that would have been a terrific buy-up price for SNDL stock. The bulls started to wake up, pushing the share price up to around 47 cents by the end of 2020.

That’s just the beginning of the story. January and early February were absolutely amazing for the SNDL stock bulls. During that time, SNDL shares rocketed up to a stunning 52-week high of $3.96.

Chasing the stock price at the peak wasn’t a great idea, though, as there was a sharp decline in the Sundial share price on Feb. 11. Thus, on the afternoon of Feb. 19, SNDL stock was trading near the $1.50 level.

That’s rough for folks who bought near the peak, but at least new investors were given a chance to get in at a more favorable price point.

A Tasty Product Offering

So, I won’t make you wait for the big news any longer. On Feb. 16, investors learned that Sundial Growers announced a $22 million investment in Indiva (OTCMKTS:NDVAF).

You might not be familiar with Indiva. It can be surmised that the company’s name is a mixture of the cannabis strains indica and sativa.

But there’s more to the company than a clever name. Before you invest in Sundial, you’ll definitely want to check out the Indiva website and familiarize yourself with the company’s product offerings.

You’ll see a variety of cannabis-enhanced edibles there. You can contrast this with Sundial’s product offerings, which aren’t edibles-focused for the most part.

From chocolates to gummies, and even cannabis salt and sugar, Indiva offers an array of premium products in the broader edibles category. Thus, you don’t need to be an edibles connoisseur to discern Indiva’s footprint in this important market niche.

Edibles Category to Expand

Should Sundial expend $22 million to invest in a an edibles-focused company?

It’s a valid question, and there’s an equally valid answer. Zion Market Research expects the global cannabis edibles market to generate around $11.564 billion by 2025.

That would represent a compound annual growth rate (CAGR) of approximately 25.4% between 2019 and 2025. You simply won’t find many market niches with an expected CAGR of that magnitude.

In support of this growth projection, Zion Research asserts, “Solid edibles are estimated to hold a major share of the global cannabis edibles market in the future. Consumption of cannabis edibles includes the ability to benefit from the properties of cannabis without smoking the flower or vaporizing distillates.”

In other words, edibles present a clean, convenient and socially acceptable way to ingest cannabis. With that in mind, Sundial’s stake in Indiva makes perfect sense.

The Takeaway

Sundial Growers’ $22 million investment in Indiva should pay off handsomely in the long run as the edibles category is poised for strong growth.

This, in turn, should benefit SNDL stock holders as Sundial’s move into the edibles niche should only enhance the stock’s value.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.


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