Analysts' Ideas of the Week - Amazon's Job Posting and Record High Inflation in the U.S - Baystreet.ca
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Analysts' Ideas of the Week
Amazon’s Job Posting and Record High Inflation in the U.S.
July 26, 2021
www.researchfrc.com
Page 2
Reddit Discussed Stocks
Last week’s pick, Roku Inc. (NASDAQ: ROKU), went from US$407.70 on Monday,
to a high of US$474.97 on Friday (up 16.5%). The Electric Vehicle sector remains the
most actively discussed among retail investors, followed by cryptos. This week, we are
observing strong retail sentiment around Apple Inc. (NASDAQ: AAPL). Key parameters
used may include – a) total number of mentions, b) percentage change in the number of
mentions, c) stock sentiment, and d) market capitalization.
July 26, 2021
Company Ticker Sector
Apple Inc. APPL Consumer Electronics
Source: FRC
FRC Top Picks
The following table shows last week’s top five performers among our Top Picks,
including two junior resource companies (one gold and one uranium), and one each in
the cannabis, hemp, and crypto sectors. The top performer, Voyager Digital (CSE:
VYGR), was up 17% as the company announced record revenue in Q4 (quarter
ended June), blowing past our estimate. In addition, last week, Amazon (NASDAQ:
AMZN) posted a job opening for a digital currency and blockchain product lead, initiating
rumors that Amazon might start accepting crypto payments. Bitcoins prices were up
13% over the weekend. Our reports on VYGR can be viewed here.
Top Five Performers Last Week
Source: FRC
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Page 3
Companies in our Top Picks list are up 41% on average since we initiated
coverage vs 2% for the benchmark (TSXV).
Performance by Sector
Source: FRC
Our complete list of top picks (updated weekly) can be viewed here.
Weekly Mining Commentary
After dropping 2.6% in the week prior to last, global equity indices we track moved up
1.6% last week as global vaccination rates continue to ramp up.
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Source: FRC / Various
Copper and nickel prices surged on a steep decline in inventory levels on the
SHFE (Shanghai).
Source: FRC / Various
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Valuations of gold producers were flat WoW; base metal producers were up 4%.
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Source: S&P Capital IQ & FRC
Six (seven last week) of the 15 hardest hit nations (including the U.S., France,
Turkey, Italy, Iran, and Indonesia) are experiencing a spike in new COVID-19 cases. On
a positive note, new daily cases in the U.K and Russia have dropped after reporting
WoW increases in the prior few weeks.
Globally, 27.2% have received at least one dose vs 26.3% at the same time last
week. 70.9% of Canadians have received at lease one dose (previously 70.2%). 55% of
Canadians are fully vaccinated (previously 50%) vs 55% in the U.K. (53%), and 49% in
the U.S. (48%).
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We are maintaining our price forecasts. Check out this video to learn why we have a
positive outlook on near-term gold prices. Inflation in the U.S. hit record highs in
June.
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U.S. Inflation
Key changes to our rating/fair value estimates of companies under coverage are listed
below:
In the following section, we review companies that announced key developments in the
past week.
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Mining / Exploration
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Rio2 Limited TSXV: RIO $0.71 $1.40
PR Title FRC Opinion
Arranges project financing of US$125- Positive – US$50M to come from a
$135M to fully fund its Fenix gold mine to streaming agreement with Wheaton
production. Precious (TSX: WPM), US$50-$60M from a
debt facility, US$20M from a brokered
equity financing, and US$5M from a non-
brokered private placement (including
participation from WPM). This financing, if
completed, will cover the entire initial
CAPEX estimate. A PFS completed in 2019,
had shown an initial CAPEX estimate of
US$111M, and an AT-NPV5% of US$181M
at US$1,400/oz gold. RIO’s current MCAP
is C$134M. Preparations are ongoing to
commence production in late 2022.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Blue Lagoon CSE: BLLG $0.64 $1.07
Resources
PR Title FRC Opinion
Increases its ownership of Dome Positive – BLLG was able to increase its
Mountain by 21.73%; now owns 100% interest for just $125k in cash and 400k
shares. We are raising our fair value
estimate from $1.03 to $1.07. The recent
equity financing partially offset the positive
impact from increased ownership.
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Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Monarch Mining TSX: GBAR $0.90 $1.68
Corporation
PR Title FRC Opinion
Announces a $11.25M transaction with Positive – This non-dilutive transaction (by
Gold Royalty Corp. (NYSE: GROY). selling royalty/NSR on its properties)
significantly strengthens GBAR’s balance
sheet. Upon closing, GBAR will have $30M
in cash and equivalents.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Inca One Gold TSXV: IO $0.37 $1.10
Corp
PR Title FRC Opinion
Reports record production for June. Positive - 46% MoM, and 37% YoY
increase in June is very promising. Pleased
to see production growth as operations
were previously impacted by the pandemic-
induced restrictions. We are expecting a
weak Q4 (quarter ended April), followed by
a record Q1 (ended July).
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Rockcliff Metals CSE: RCLF $0.075 $0.30
Corporation
PR Title FRC Opinion
Completes $3M sale to Kinross (NYSE: Positive – We had not accounted for any
KGC) of non-core gold assets. value from these non-core assets in our
valuation. Although $3M only accounts for
less than $0.01 per share, we believe the
deal strengthens RCLF’s balance sheet,
avoids near-term share dilution, and allows
it to fully focus on its core-assets.
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Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Wealth Minerals TSXV: WML $0.34 N/A
Ltd
PR Title FRC Opinion
Portfolio Update Neutral – Reconfigured its lithium package
in Chile by moving away from licenses with
low prospects for shallow brines, and areas
important to local indigenous groups. We
expect WML to announce details of its near-
term exploration plans.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Cora Gold AIM: CORA £0.105 £0.18
Limited
PR Title FRC Opinion
First Zone B results start with strong Positive – Continues to return high grade
grades and widths of oxide mineralisation values and show resource expansion
potential; 8m @ 19.11 g/t Au and 32m @
4.43 g/t Au are very promising results. The
current resource is based on just 25% of an
identified strike length of 40 km
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Southern Silver TSXV: SSV $0.34 $1.06
Exploration Corp
PR Title FRC Opinion
Receives technical approvals for a drill Positive – Pleased to see the company
program to test several copper targets at expanding and diversifying its exploration.
the Oro project, New Mexico. Our valuation does not account for any
value from Oro. We will closely monitor the
upcoming six-hole drill program.
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Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Skyharbour TSXV: SYH $0.38 $0.77
Resources Ltd.
PR Title FRC Opinion
Partner company Valor (ASX: VAL) Positive – The survey had identified targets
announces airborne survey; highlights for drilling. Our valuation on SYH does not
targets at Hook Lake project, Athabasca account foy any value from Hook Lake.
Basin Valor can earn-in 80% by spending $3.5M,
paying $475k in cash, and issuing 233M
shares. SYH will benefit if the upcoming drill
program returns positive results.
Company Ticker Current Share FRC Fair Value Date of PR:
Name: Symbol Price: Estimate:
Renforth CSE: RFR $0.085 $0.12
Resources Inc.
PR Title FRC Opinion
Completes Surimeau drill program with Positive – Surimeau is showing potential.
visible nickel and copper mineralization. We are still unable to assign a value on the
project as it is still in early stages. 100% of
our fair value comes from Parbec.
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Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Quaterra TSXV: QTA $0.12 $0.49
Resources Inc.
PR Title FRC Opinion
Update on water rights Negative – Shares were down 51% today
on the State of Nevada’s decision to not
extend QTA’s water rights permits, due to
increased demand for water from other
users, and QTA not using its rights since
2011. In the press release, QTA stated that
it “..has retained legal counsel to initiate and
vigorously undertake an appeal process”.
Water rights are essential for developing
QTA’s projects. If management is able to
demonstrate a clear-cut route to production,
we believe there is a possibility that they will
be able to regain water rights. Alternatively,
they will have to acquire water rights from
third-parties if and when its projects are
advanced to production. We are unable to
speculate the impact of this recent
development on QTA’s prior sales of water
rights to third parties (US$9M in total since
2018). We will publish an update when we
have more clarity on this topic. We are not
changing our fair value estimate, and
continue to believe that shares are
undervalued. QTA’s current Enterprise
Value is just $0.002/lb of copper vs the
sector average of $0.028.
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Financials, Technology, Energy, and Special Situations
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Yorkton Equity TSXV: YEG $0.35 N/A
Group
PR Title FRC Opinion
Closing of the first tranche of a non- Positive – Funds will be used towards the
brokered private placement. previously announced purchase of the
Langford property, and renovations and
upgrades to the Riviera Gardens property.
We believe the multi-family residential rental
market is one of the most attractive markets
in Canadian real estate in the near-term.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
BIGG Digital CSE: BIGG $1.52 $3.90
Assets Inc.
PR Title FRC Opinion
Announces record quarterly revenue with Positive – Q2 revenue of $4.6M was in line
growth of over 25% from the previous with our forecast. We will wait for the
quarter. company to provide full Q2 results prior to
publishing an update report.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
TAAT Global CSE: TAAT $3.74 $5.37
Alternatives Inc.
PR Title FRC Opinion
Named “Best New Product” at convention Positive – We are pleased to see TAAT
in Las Vegas, Nevada. products receive positive reviews from
consumers. In our most recent report dated
July 16, 2021, we had raised our 2021
revenue forecast from $2.44M to $2.92M.
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Cannabis
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Pure Extracts CSE: PULL $0.39 $0.90
Technologies
Corp.
PR Titles FRC Opinion
Signed a white label agreement with Positive – The details of the transaction -
Nelson, B.C. based Joe’s Hemp Shack price and quantity of products, were not
Inc., to launch a line of vape products. disclosed. Once we get more details, we will
update our models accordingly. The Lion’s
Submits Health Canada license Mane product line is expected to be
application for its Lion Mane mushroom launched in Q4-2021.
product line.
Company Ticker Current Share FRC Fair Value
Name: Symbol Price: Estimate:
Halo Collective NEO: HALO $0.04 $0.15
Inc.
PR Title FRC Opinion
Enters into a purchase agreement to Positive – The purchase agreement adds
acquire Williams Wonder Farms to Halo’s cultivation facility in Oregon, and
cultivation facility in Oregon. enhances its product portfolio (genetics
library). The acquisition price reflects a
multiple of 1.6x vs the sector average of
2.8x.
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Weekly Cannabis Commentary
Cannabis Industry Performance
July 26, 2021
U.S. Companies YTD 1-Week 1-Year
Curaleaf Holdings Inc. -4% -2% 47%
Trulieve Cannabis Corp. -4% -5% 98%
Green Thumb Industries Inc. 20% -1% 122%
Cresco Labs Inc. -2% -4% 80%
Canadian Companies YTD 1-Week 1-Year
Aurora Cannabis Inc. -26% 2% -34%
Canopy Growth Corp. -26% 1% 1%
Cronos Group Inc. -7% 1% 3%
Tilray Inc. -12% 1% -13%
HEXO Corp. 1% -2% 42%
Organigram Holdings Inc. 73% 3% 99%
Canadian Average 1% 1% 16%
U.S. Average 3% -3% 87%
Indices
Canadian YTD 1-Week 1-Year
HMMJ 14% 1% 32%
MCAN 12% 0% 32%
XCAN 3% 1% 15%
U.S. YTD 1-Week 1-Year
MSOS -5% -1% 51%
Source: FRC
Last week, Canadian cannabis stocks outperformed their U.S. peers. Statistics
Canada reported record cannabis sales for May of $313M, up 68% YoY. We note that
U.S. cannabis stocks had outperformed in the previous four weeks.
Valuation
As of July 26, 2021, the Canadian big four LPs were trading at a 94% premium (up from
89% in the previous week) over their U.S. peers. We continue to believe the
valuation gap will diminish as the U.S. moves closer to federal legalization.
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July 19, 2021 July 26, 2021
Canadian Companies Ticker TEV/Revenue TEV/EBITDA TEV/Revenue TEV/EBITDA
Aurora Cannabis Inc. TSX: ACB 6.6 NM 6.6 NM
Canopy Growth Corp. TSX: WEED 16.9 NM 16.9 NM
Cronos Group Inc. TSX: CRON 28.5 NM 27.8 NM
Tilray Inc. NASDAQ: TLRY 14.1 NM 13.7 NM
HEXO Corp. NYSE: HEXO 7.4 NM 6.9 NM
Organigram Holdings Inc. TSX: OGI 10.2 NM 9.8 NM
AVERAGE 12.7 NM 13.6 NM
MEDIAN 10.2 NM 9.8 NM
MINIMUM 5.0 NM 5.0 NM
MAXIMUM 28.5 NM 27.8 NM
U.S. Companies Ticker TEV/Revenue TEV/EBITDA TEV/Revenue TEV/EBITDA
Curaleaf Holdings Inc. OTC: CURLF 12.3 41.9 11.7 40.1
Trulieve Cannabis Corp. OTC TCNNF 7.3 15.6 6.9 14.8
Green Thumb Industries Inc. OTC: GTBIF 10.6 29.0 10.5 28.8
Cresco Labs Inc. OTC: CRLBF 6.9 22.9 6.6 22.0
AVERAGE 9.3 27.4 8.9 26.4
MEDIAN 9.0 26.0 8.7 25.4
MINIMUM 6.9 15.6 6.6 14.8
MAXIMUM 12.3 41.9 11.7 40.1
Canadian Big Four Average 19.8 19.5
WEED, ACB, TLRY, CRON Median 16.9 16.9
Implied Premium Over U.S. Big Four (Median) 89% 94%
Source: S&P Capital IQ, FRC
The following chart shows the average EV/R of the companies we track in both
countries:
Average EV/R
Source: S&P Capital IQ, FRC
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Canadian Retail Cannabis Pricing
Province (As of 2021/07/26) Average Price per Gram Average Price per Gram THC Average Price per Gram CBD # of Products Min. Price Max. Price
B.C. $ 9.61 $ 9.68 $ 8.45 251 $ 3.53 $ 15.71
Ontario $ 9.41 $ 9.57 $ 7.88 365 $ 3.57 $ 22.66
Quebec $ 9.25 $ 9.25 $ 9.23 268 $ 3.60 $ 21.68
Alberta $ 10.75 $ 10.74 $ 10.78 411 $ 3.14 $ 22.00
N.B. $ 9.29 $ 9.42 $ 7.64 206 $ 3.36 $ 15.99
P.E.I. $ 9.61 $ 9.63 $ 9.34 187 $ 4.40 $ 23.30
Newfoundland $ 9.98 $ 9.92 $ 10.32 169 $ 4.46 $ 15.40
Yukon $ 16.33 $ 15.13 $ 13.95 4 $ 13.68 $ 13.95
N.S. $ 10.01 $ 10.05 $ 9.50 196 $ 5.14 $ 42.85
Nunavut $ 13.15 $ 13.35 $ 13.41 32 $ 9.43 $ 17.91
Northwest Territories $ 14.68 $ 12.65 2 $ 12.08 $ 17.28
Manitoba $ 11.31 $ 11.22 $ 11.55 374 $ 4.87 $ 23.57
Saskatchewan $ 12.04 $ 12.04 $ 12.07 266 $ 4.40 $ 38.50
CANADA $ 11.19 $ 10.97 $ 10.34
Province (As of 2021/07/19) Average Price per Gram Average Price per Gram THC Average Price per Gram CBD # of Products Min. Price Max. Price Max. Price
B.C. $ 9.66 $ 9.73 $ 8.45 247 $ 3.53 $ 15.71 $ 15.71
Ontario $ 9.40 $ 9.56 $ 7.88 362 $ 3.57 $ 22.66 $ 22.66
Quebec $ 9.27 $ 9.28 $ 9.23 267 $ 4.83 $ 21.68 $ 21.68
Alberta $ 10.78 $ 10.77 $ 10.81 402 $ 3.14 $ 22.00 $ 22.00
N.B. $ 9.38 $ 9.52 $ 7.76 201 $ 3.57 $ 15.99 $ 16.28
P.E.I. $ 9.61 $ 9.63 $ 9.34 187 $ 4.40 $ 23.30 $ 23.30
Newfoundland $ 10.01 $ 9.96 $ 10.32 169 $ 4.46 $ 15.40 $ 15.40
Yukon $ 16.33 $ 15.13 $ 13.95 4 $ 13.68 $ 13.95 $ 22.28
N.S. $ 10.01 $ 10.05 $ 9.50 389 $ 5.14 $ 42.85 $ 42.85
Nunavut $ 13.15 $ 13.35 $ 13.41 32 $ 9.43 $ 17.91 $ 17.91
Northwest Territories $ 14.68 $ 12.65 2 $ 12.08 $ 17.28 $ 17.28
Manitoba $ 11.36 $ 11.28 $ 11.55 371 $ 4.87 $ 23.57 $ 23.57
Saskatchewan $ 12.05 $ 12.05 $ 12.07 264 $ 4.40 $ 38.50 $ 38.50
CANADA $ 11.21 $ 11.00 $ 10.36
Source: Online Provincial Cannabis Stores, FRC
The average retail price per gram fell week-over-week from $11.21 to $11.19. The
chart below shows the Canadian retail dried cannabis flower pricing trend:
Canadian Retail Dried Cannabis Flower Pricing
Source: Online Provincial Cannabis Stores, FRC
Canadian Retail Cannabis Stores
As of July 26, 2021, there are 2,351 retail cannabis stores, a week-over-week increase
of 14 stores across Canada, including six in Ontario, and four in Alberta.
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Nationwide Store Count
June-21-2021 June-28-2021 July-5-2021 July-12-2021 July-19-2021 July-26-2021
Geographic Region Store Count Store Count Store Count Store Count Store Count Store Count Population Population / Store
Alberta 648 651 652 653 657 661 4,428,247 6,740
B.C. 359 362 362 364 367 367 5,120,184 13,951
Manitoba 93 93 101 103 105 106 1,379,121 13,134
N.B. 20 20 20 20 20 20 780,890 39,045
N.S. 25 25 25 25 25 25 978,274 39,131
Newfoundland 30 30 30 30 30 30 520,437 17,348
Northwest Territories 6 6 6 6 6 6 44,982 7,497
Nunavut 39,486
Ontario 820 849 872 885 948 954 14,745,040 15,554
P.E.I. 4 4 4 4 4 4 158,717 39,679
Quebec 68 69 71 73 74 75 8,552,362 115,572
Saskatchewan 82 82 88 88 96 98 1,181,987 12,312
Yukon 5 5 5 5 5 5 41,293 8,259
CANADA 2,160 2,196 2,236 2,256 2,337 2,351 37,971,020 16,248
Source: Provincial Websites, FRC
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Weekly Psychedelic Commentary
Psychedelic Industry Performance
July 26, 2021
Company YTD 1-Week 1-Year
COMPASS Pathways plc -16% 4% 26%
Atai Life Sciences N.V. -17% -5% -17%
Numinus Wellness Inc. -16% -8% 255%
Mind Medicine Inc. 3% -4% 791%
Braxia Scientific Corp. -67% -2% -67%
Seelos Therapeutics Inc. 62% -7% 103%
AVERAGE -9% -4% 182%
MIN -67% -8% -67%
MAX 62% 4% 791%
Index YTD 1-Week 1-Year
PSYK -7% 1% -7%
Source: TMX Money, FRC
Last week, Braxia Scientific Corp (CSE: BRAX) announced they secured insurance
coverage from Medavie Blue Cross to provide fully covered ketamine treatments to
individuals suffering from depression and related disorders. We believe insurance
coverage is an indication of the growing acceptance of psychedelics.
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