In a report released today, Andrew Semple from Echelon Wealth Partners maintained a Buy rating on High Tide (HITI – Research Report), with a price target of C$8.50.
Andrew Semple’s Buy rating for High Tide’s stock hinges on a blend of robust financial performance and strategic initiatives that bolster the company’s market position. High Tide has consistently outperformed revenue estimates for nine consecutive quarters and has maintained positive adjusted EBITDA for fifteen consecutive quarters. Their discount club retail strategy has proven highly effective in the Canadian market, helping them gain significant market share. Furthermore, the expansion of High Tide’s retail ecosystem, including the launch of Cabana ELITE and the Cabanalytics Consumer Insights publication, has deepened customer loyalty and provided opportunities to strengthen relationships with licensed producers (LPs).
Semple’s confidence is further underpinned by High Tide’s impressive free cash flow (FCF), which reached $5.7M, indicating an annualized levered FCF yield of 11%. This achievement not only validates the strategic decision to convert to the discount club model but also underscores the company’s reduced dependence on unpredictable capital markets. High Tide’s solid cash position and sustainable FCF generation equip it to continue leading the Canadian retail market and capitalize on consolidation opportunities, including accretive mergers and acquisitions. Additionally, strong same-store-sales growth and the rapidly expanding Cabana Club loyalty program signal continued organic growth potential, enhancing the investment case for High Tide.
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Based on the recent corporate insider activity of 18 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of HITI in relation to earlier this year.
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High Tide (HITI) Company Description:
High Tide, Inc. operates as a counterculture chain, which engages in the manufacture and retail of cannabis accessories. The firm operates through the Wholesale and Retail business segments. Its brands include: Famous Brandz, RGR, Smoker’s Corner, Canna Cabana, KushBar, and Kush West. The company was founded by Harkirat Grover in 2009 and is headquartered in Calgary, Canada.
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