Charlotte’s Web Holdings (OTCMKTS:CWBHF) has been on a gut reaching ride of late, but is it now a buy again?
The global cannabis industry is booming and its niche segment known as cannabidiol (CBD) is a space that is growing rapidly. One of the small-cap stocks in that particular niche is Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) and could well prove to be the small-cap winner in the long term.
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As previously mentioned, CBD is one of the niches in the marijuana industry that appears set to explode, and Charlotte’s Web Holdings is positioned to ride the wave.
The Boulder, Colorado-based company produces CBD from hemp and currently, it is the world leader in this particular segment. It’s particularly important to note that Charlotte’s controls every stage of the process, starting from the production of hemp to its retailing.
Charlotte’s Web produces 675,000 pounds of hemp a year and that has ensured that the there is never a break in the production process.
It distributes its own product to retailers and has raised its retail footprint considerably over the past year. In addition to that, it has created an e-commerce arm as well and ships its product straight to the end user.
One of the key features of Charlotte’s is that the company has produced excellent profit growth over the past few years. In 2018, the company’s gross profits stood at $52.3 million, which reflected a staggering rise of 75% from the previous year. Revenues rose by 74% in 2018 and stood at $69.5 million. Needless to say, profitability is not a problem for Charlotte’s.
More importantly, the production of CBD oils has further helped the company in raising its revenues and if it continues to produce such products, then it would only become more profitable. According to analysts, Charlotte’s sales is expected to rise to $152 million in 2019 and then to $313 million in 2020. At this point of time, the company is valued at $1.8 billion but with the CBD industry expected to be valued at $20 billion by 2022, Charlotte’s is a stock that cannot be overlooked.
Shares of Charlotte’s Web Holdings (OTCMKTS:CWBHF) are down almost 30% from its April’s peak price of $25.25.
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Disclosure: we hold no position in $CWBHF, either long or short, and we have not been compensated for this article