In early November, 1933 Industries (TGIF.CN) (TGIFF) expanded its cannabidiol (CBD) product line and launched the Birdhouse line of products. Tony Hawk is one of the best known skateboarders and we expect to see strong demand for this line of CBD products.
From a branding standpoint, 1933 Industries has been nothing short of an execution story and we are favorable on this aspect of the story. Through strategic partnerships and investments, the company has added several high-profile cannabis brands to its portfolio and we find this to be significant. In a time where safety is of the utmost importance, we expect to see consumers show a preference for certain brands and believe that 1933 will be benefit from this trend.
Through 1933 Industries’ Canna Hemp subsidiary, the company has been able to penetrate 46 states across the US and is working to become a leading CBD brand. We expect the launch of Birdhouse to result in strong growth on the CBD side of the business and will monitor how the product line gains traction.
At current levels, 1933 Industries has an attractive risk-reward profile and is trading at a discount when compared to its peers. With approx. $50 million of current assets and a market cap of approx. $30 million, this is an opportunity that is hard to ignore and we will continue to closely monitor the business. In 2020, we expect 1933 Industries to record strong revenue growth and believe that the market underappreciates this aspect of the story.
When analyzing the 1933 Industries operation, there are a number of initiatives to be excited about. From a major expansion in Las Vegas to entering the California cannabis market, the company has substantial growth prospects and we believe this is opportunity is worth watching. During the last few months, 1933 Industries has been under pressure and has traded lower with the market. We believe that the concerns pertaining to vaping has put additional pressure on the sector and expect this weakness to be transitory.
1933 Industries represents a multi-faceted growth story and we believe that the management team operates in the best interests of shareholders. We are of the opinion that the company is focused on expanding in ways that are efficient and that will generate substantial cash flow. We are favorable on how the 1933 Industries’ story has evolved, and this is an opportunity to be watching.
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