Among the cheapest legal marijuana plays today, Canadian cannabis company Sundial Growers (NASDAQ:SNDL) has been a popular meme stock in 2021. Just about anyone can afford to buy shares of SNDL stock, as it’s trading under $1 per share.
The stock is also relatively cheap in the sense that it’s trading at its lowest price in a while. This should pique the interest of value-seeking investors who believe in the future of the cannabis market.
Even as SNDL stock nears the bottom of its range, Sundial Growers has some encouraging news to report. Indeed, the company’s implementing a program that you wouldn’t typically expect from a small cannabis company.
On top of that, Sundial went from negative to positive in a crucial metric for all cannabis companies — and for every type of business, really.
With that in mind, let’s check on the stock’s price action and see if there’s a bargain to be had here.
SNDL Stock at a Glance
The year started off with a bang as SNDL stock rallied from 55 cents to a stunning 52-week high of $3.96 in February. It’s possible that this share-price spike was precipitated by Reddit users. However, it would be difficult to prove this hypothesis.
In hindsight, it’s evident that the run-up was too much, too soon. After all, it’s difficult to justify a 500%+ return in just a few weeks. Hence, a retracement was practically inevitable. By May, SNDL stock had slumped to 70 cents.
Fast-forward to late November, and Sundial’s share price was down to 67 cents, its lowest price since May.
This type of price action is only rational if the company is having serious problems. Otherwise, it could be a major buying opportunity for risk-tolerant, contrarian investors.
An Uncommon Program
Stock-share buybacks are something you often see with large-capitalization companies. They’re typically considered a good sign, as buybacks can represent a company’s confidence in its future outlook.
Furthermore, share repurchases can boost a stock’s price in the short term.
But again, this is a practice that’s common among big companies. You won’t often see small businesses doing this, especially in the cannabis space.
Yet Sundial Growers doesn’t follow the beaten path.
The company’s board of directors just approved a new share repurchase program. This authorizes Sundial Growers to repurchase up to 100 million CAD worth of its outstanding common shares.
Don’t worry — there will still be plenty of stock shares available for the retail investors.
That’s because Sundial will only purchase a maximum of 102.8 million shares under the program, representing roughly 5% of issued and outstanding shares (as of the announcement date).
From the Red, into the Green
That isn’t the only good news to report, by the way.
Not long ago, Sundial Growers released its third-quarter 2021 financial data.
Judging by the price action in SNDL stock, you might assume that the quarterly results were disappointing.
That’s actually not the case, however. Consider this: Sundial reported an impressive adjusted EBITDA of $10.5 million for the quarter.
When we compare this to the adjusted EBITDA loss of $4.4 million in the third quarter of 2020, it’s evident that Sundial Growers is moving in the right direction. Financial experts understand that adjusted EBITDA represents a key measure of a company’s operating performance.
We can also observe that Sundial generated net revenue from its cannabis segments of $14.4 million during 2021’s third quarter. That marks an improvement of 57% over the second quarter of 2021, as well as an increase of 12% over the third quarter of 2020.
There may be a mismatch between the SNDL stock price right now and Sundial Growers’ true value as a company.
The fact that Sundial will be repurchasing its own shares is a sign of the company’s self-confidence.
Moreover, swinging to a positive adjusted EBITDA shows that Sundial Growers is a cannabis grower on the right fiscal path.
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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