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Stone Fox Capital Advisors is a registered investment advisor founded in 2010. The firm offers portfolio management with a focus on opportunistic stocks providing secular growth trends at an affordable value. An emphasis is placed on fundamental analysis though charts are used for timing entry and exit points. Mark Holder graduated from the University of Tulsa with a double major in accounting & finance. Mark has his Series 65 and is also a CPA. Invest with Stone Fox Capital's model Net Payout Yields portfolio on IB Asset Management as he makes real time trades. The site allows followers to duplicate the model portfolio in their own brokerage accounts. You can find the portfolio and more details here: Follow Mark on twitter: @stonefoxcapital

This Cannabis Stock Is Not Only Friendly to Pets, but Also to Shareholders

Charlotte’s Web Holdings (CWBHF) has a lot going for the company. Not only is the company perfectly positioned in the domestic CBD market, but also the stock is remains relatively under the radar. The company recently expanded a canine-focused pet line due to strong market demand that should reward shareholder.

Big Pet Opportunity

According to the Brightfield Group, the CBD pet market is forecast to surge to a market size of $1.16 billion by 2022. Charlotte’s Web recently launched an expanded canine-focused pet lineup with 12 new SKUs to capture growing demand.

The market for canine products focuses on products for calming dogs to reduce stresses and to general pain relief from stiffness in hips and joints. Charlotte’s Web uses hemp extracts to make chews, balms, and flavored and unflavored oils to supply the canine market.

In Q4, revenues from animal nutrition products grew by 126%. The 2018 growth for the canine products was 189%, though some of the excitement should be tampered down due to the products only being released in February 2017. The revenue amounts are still relatiely small, but the key is Charlotte’s Web building up a brand name as the market opens up.

Hidden Value

While Charlotte’s Web doesn’t appear cheap on first brush, the company is uniquely positioned in the CBD market. A big plus is that, the company is focused on being a brand with a strong ecommerce platform for their hemp-based CBD products.

The stock has a current market value in the $1.7 billion range with a 2019 revenue target of $190 million. The forecast is for revenue growth of about 150% that is impressive until one views some projections of other companies in the cannabis sector.

Without the costly retail stores, Charlotte’s Web doesn’t have all of the large fixed costs. In addition, the Colorado-based company already has the supplies due to a 10 fold increase in hemp production in 2018 to 675,000 pounds.

The company is ahead of the game as other players like Canopy Growth (CGC) and Village Farms (VFF) look to just now enter the CBD market following the passing of the 2018 Farm Bill. Charlotte’s Web is already on the market releasing updates to existing product lines like the canine pet lineup.

In Q4, the company produced 20% EBITDA margins on revenues of only $21.5 million. Higher revenues from expanded product lines and more retail distribution outlets in 2019 should lead to some substantial revenue growth followed by strong EBITDA margins. The company forecasts a return to historical EBITDA norms in the 30% to 35% range while most cannabis companies don’t even have historical norms.

As 2019 ends, the market will stop throwing all of the cannabis stocks into one basket with a likely preference for strong brands with high margins. Companies without the high fixed costs of large farming operations and retail locations will likely find strong appeal among investors.


The key investor takeaway is that Charlotte’s Web continues to expand production lines and distribution sources without spending wildly on facilities. The stock recently bounced off highs and has several catalysts for even higher prices including the uplisting of the stock to a major stock exchange.

For these reasons, Charlotte’s Web is not only friendly to pets, but also shareholders.

To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.


Disclosure: The author has no positions in CWBHF stock.

Read more: Can Marijuana Stock Charlotte’s Web (CWBHF) Go Even Higher?


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