Shares of Planet 13 Holdings (PLTH -7.32%) (PLNH.F 4.35%) and Mudrick Capital Acquisition Corporation (MUDS 0.05%) have been on a tear since February. Their 25% and 40% returns are very impressive, considering the S&P 500 benchmark only rose by 8.6% during the same period.
What's behind the luxury cannabis operator and the (soon-to-be) iconic trading card company's rallies? Well, the strength of their brands alone is enough to uplift their stocks to new heights.
1. Planet 13 Holdings
Planet 13 might be the most unique cannabis company in the country. Instead of rushing to open a large number of dispensaries or scaling wholesale partnerships, the company is devoting its efforts to marijuana superstores. Its flagship Las Vegas store is located minutes away from the Vegas Strip and is open until 3 a.m. on weekends. The establishment also has a coffee shop, restaurant, and interactive experiences like LED floors.
Almost of Planet 13's $70.5 million in sales in 2019 came from its Vegas store, and accounted for about 10% of all cannabis sold in Nevada. Due to a one-time COVID-19-related traffic decline, its sales grew only 10.8% compared to 2019. As we are nearing the end of the pandemic, partygoers are starting to return en masse to Sin City.
Its catalog of vapes, edibles, flowers, extract, pre-rolls, tinctures, and topicals prove immensely popular among tourists from nearby resorts and casinos. Planet 13 also plans to open a second superstore in Santa Ana, California, by early July. It is conveniently located at just 20 minutes away by car from Disneyland. The company plans to implement home delivery as a core feature. It already operates a neighborhood dispensary in Nevada aside from the two locations mentioned.
Investors expect a sharp increase in the company's revenue this year, as its stock is trading for 8.7 times forward sales. Before the pandemic, the company grew sales by a stunning 200% a year, so that expectation looks pretty reasonable. What's more, insiders own nearly half of the company, illustrating management's high degree of faith in Planet 13's long-term prospects. This is definitely a lucrative cannabis stock to check out now.
2. Topps (Mudrick Capital Acquisition Corporation)
By the end of the year, special purpose acquisition company (SPAC) Mudrick Capital plans to acquire trading card and candy company Topps. For over 70 years, the company has partnered with the MLB in selling collectible baseball trading cards.
Don't be put off by what appears to be a niche market. There's a whole market of loyal fans who are more than happy to pay for memorabilia. Right now, limited-edition cards for rookie players can fetch between $1.0 million and $5.2 million apiece at auctions.
What's more, the company expanded into the blockchain industry by offering baseball cards for sale as nonfungible tokens (NFTs). It plans to sell 1.38 million virtual cards in late April; rare cards will come with animated backgrounds or holographic effects. The technology assures buyers that they are getting authentic versions of the cards during auction or resale.
The company also partners with other iconic brands such as Formula 1 and Star Wars in issuing collectibles. It also has its collection of interactive card game apps and gift cards. Last year, its e-commerce sales grew to $92 million, compared to less than $5 million in 2015. This side of the business has a highly scalable model, with the potential for the company to sell its treasured cards to other countries where baseball is popular, like Japan. Outside of its sports and entertainment segment, approximately one third of its revenue comes from its candy sales. Its brands like Ring Pop consistently perform among the top four in the country.
The company's revenue increased by 23% year over year to $567 million last year. It anticipates further momentum with an estimated 22% annual increase in sales this year. That's very cheap, considering its enterprise value (EV) is only two times higher than its revenue. All of these factors make Topps' SPAC a top growth stock for investors' portfolios.