We came across a bullish thesis on SNDL Inc. (SNDL) on Twitter by Coburn420D. In this article, we will summarize the bulls’ thesis on SNDL. SNDL Inc. (SNDL)’s stock was trading at $2.16 as of Nov 4th. SNDL’s forward P/E was 37.17 according to Yahoo Finance.
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SNDL, a Canadian cannabis company, has recently drawn attention as a compelling investment opportunity, trading at approximately one-third of its fair value and positioned for a significant near-term catalyst. Despite the convoluted nature of its U.S. holdings due to marijuana’s federal status, SNDL has effectively navigated these challenges through its subsidiary, SunStream USA. This entity holds a two-thirds economic interest in Surterra Wellness, a notable medical cannabis operator in Florida, which commands around a 10% market share. With Amendment 3 set to appear on the November ballot, recent polls indicate an 80-90% chance of its passage, especially following a high-profile endorsement from Donald Trump. Surterra has managed to capture market share despite not opening new stores in years, making it well-positioned for substantial growth should recreational cannabis use be legalized.
If the amendment passes, projections suggest that Surterra’s valuation could equate to two-thirds of a pro forma gross profit of $200-300 million, leading to an estimated net present value of $2-4 per share—potentially exceeding SNDL’s entire current market capitalization. As the election date approaches, the market is likely to begin pricing in this positive scenario. Additionally, SNDL offers robust downside protection through its other assets. These include a core Canadian liquor and cannabis business, valued at around $2 per share, which is nearing cash flow breakeven after recent efficiency improvements. Other U.S. assets, including loans and properties in Michigan, Massachusetts, Nevada, and Texas, contribute approximately $0.50 per share, alongside another $0.50 per share in unencumbered cash, providing a safety net against potential downturns.
In a favorable scenario where Florida legalizes recreational cannabis, which appears to have an 85% probability, SNDL’s valuation could rise to $5-7 per share, indicating substantial short-term return potential. Conversely, even if the amendment fails, the company’s diversified asset base ensures considerable downside protection. This creates a favorable “heads SNDL wins, tails it doesn’t lose much” investment scenario. Despite the broader skepticism towards Canadian cannabis stocks, SNDL represents deep value with an imminent catalyst for growth. As the company transitions from a meme stock into a legitimate business, recent insider buying from management further signals confidence in its trajectory. Moreover, clarifying misconceptions regarding its ownership structure—especially concerning the SunStream joint venture—could enhance SNDL’s valuation and investor interest. Overall, the mispricing of SNDL’s assets, coupled with the upcoming legal developments in Florida, positions it as an attractive investment opportunity with significant upside potential.
SNDL Inc. (SNDL) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held SNDL at the end of the second quarter which was 7 in the previous quarter. While we acknowledge the risk and potential of SNDL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SNDL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.