Supreme Pharmaceuticals (SL.C) bucks weed sector downturn, ramping hard

At a time when many weed companies are struggling to keep their shareholders happy, spare a thought for some investors in Supreme Pharmaceuticals (SL.C), who dipped out last week as their company stock dropped from $1.60 down to $1.25.

In Facebook groups and on messageboards, there were naysayers aplenty keen to dance on the graves of weak hands, tossing out reasons why Supreme would ‘see $0.50 soon’ and that it was worth no more than any old late stage applicant, being as it has a license to grow, but not yet sell.

At Equity.Guru, we pointed out several reasons why Supreme’s lack of sale license just didn’t matter.

Like, there’s a huge and growing lack of weed supply out there, so Supreme’s harvests are being banked in their safe, with no concern about best before dates because, hey, dried and vacuum sealed and growing in value by the day…

And that Supreme has $60m+ in cash, which it’s using to expand its footprint and which means it doesn’t give a shit if it makes $0 revs this quarter or not because payroll will be met.

And that a few million in revs from sales to other LPs wouldn’t make a dent in the overall value of the thing anyway, with its $217 million market cap.

And, that the company hasn’t even been in a rush to call in Health Canada for its final license inspection because, hey, what’s the rush? Perfect the grow, zero in on hot strains, and plan for rec.

I guess that message got through. I announced Tuesday that I would be buying Supreme at the crazy low prices it was at (I got $1.26), because to me it’s a pension lockbox. Buy it, sit on it, don’t give a shit if it drops or rises in the short term because $1.26 isn’t a price you’ll ever see again.

I did the same thing back when it was at $0.16 a year and a bit ago, selling at $0.22 a week later. I did it again on a dip to $0.70 six months or so ago, selling as it soon hit a buck. This will be my third Supreme plunder, coming in when hands get weak and making a nice turnaround, only this time I think I’ll hang in.

It’s turned out to be a good move so far. Supreme has jumped over the last few days, even as the market – and the weed market at that – has gone red.

By close Wednesday, it was at $1.42. By close today, $1.56. We’re up 21.2% in two days.

Of course, it may drop tomorrow – or it may go on another rip. But it doesn’t really matter, either way, because the ultimate goal for a company like this is to be sitting on your cheap shares when, in 2020 or 2021, it’s supplying a million kilos of weed a year to pharma companies and bread companies and drug store chains.

$1.56 a share? I’ll buy that all day. Because you’re either a flipper, and you spend all day obsessing over whether the market sees what you see, right now, because margins! Or you’re an investor, and you put your money with people and a plan that have shown they know how to build value.

Giddyup, Supreme. Take me to the promised land.

— Chris Parry

FULL DISCLOSURE: The author, as stated, owns Supreme Pharma stock. The company is not an Equity.Guru marketing client.

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

2 comments

  1. David Reply

    Hi Chris, just wondering if you had any insight on the cause of the recent downturn in so many pot stocks? What would your top buys be right now in order to take advantage of the bargains for us non-flipping/long term holders?

    I’ve been taking your advice since the old stock house days so thanks for everything!

    • Chris Parry Post authorReply

      There’s a few factors at play. General market weakness is one. Lots of folks worried about feds upping capital gains over the last week. Weed sector has been hot so long that it was due for a correction. OGI’s and Mettrum’s troubles with poison in the product haven’t helped. But mostly the market just chases the market. If it rolls down for a day, it rolls down for three.
      All told, if you’re invested in stocks you think have long term potential, don’t worry about a few days of red. Everything’s a cycle, and rec is coming.

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