IB Net Payout Yields Model

Ayr Wellness: Doing Very Well


  • Ayr Wellness forecast revenues soaring over 54% sequentially to $90 million.
  • The small MSO will quickly rival the size of global cannabis stocks with market valuations in excess of $10 billion.
  • The stock trades at only 7x EV/2022 EBITDA target of $300 million.
  • This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Learn More »
The cannabis space has taken a pause since a big rally that peaked in February based on the election of Joe Biden in the U.S Presidential election. With or without the Democrats now in charge pushing for federal legalization of cannabis, Ayr Wellness (OTCQX:AYRWF) continues to benefit by a slow approval process leaving most firms stuck on the sidelines. My investment thesis remains very bullish on the stock trading around $30 and valued at about half the EBITDA multiples of the sector.

Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Update - July 20

Another cheap deal to enter Illinois. $AYRWF is crazy cheap at $28.50

-Expanding its national footprint, Ayr Wellness (OTCQX:AYRWF) will acquire 100% of the membership interests of Herbal Remedies Dispensaries, operator of two licensed retail dispensaries in Illinois (Quincy), and add eighth state to its operating dispensaries.
-Transaction terms include consideration of $30M, made up of $10M in stock, $12M in seller notes and $8M in cash.
-Based on current projections, the company estimates it is paying ~5x Herbal Remedies 2021 EBITDA.

Update - July 13 

The market has definitely under estimated the potential of a cannabis bill this year. With Schumer introducing draft legislation tomorrow, the MSO stocks such as Ayr Wellness should see a huge boost. 

  • Senate Majority Leader Chuck Schumer (D-N.Y.) will introduce a draft of legislation tomorrow that would legalize marijuana on the federal level, according to Marijuana Moment.
  • The bill, the Cannabis Administration and Opportunity Act, will be unveiled Wednesday at a press conference.
  • While details of the proposed legislation are not yet available, the purpose of tomorrow's release is to spur discussion for a formal introduction of the bill later on.

Update - July 7 

Jefferies initiates with a $64 target while the stock trades just above $29. 

GENERATIONAL WEALTH OPPORTUNITY: Jefferies analyst Owen Bennett started coverage of seven U.S. cannabis stocks with Buy ratings, setting price targets of C$17 for TerrAscend (TRSSF), C$80 for Ayr Wellness (AYRWF), C$19 for Columbia Care (CCHWF), C$36 for Cresco Labs, C$62 for Trulieve Cannabis (TCNNF), C$70 for Green Thumb Industries, and C$32 for Curaleaf.

The analyst argued that this is a "generational wealth opportunity" with potential average expected 12-month gains across the coverage to be over 100%. This will be driven by "exceptional" industry growth, further consolidation in a fragmented industry, and institutional led sector re-rating, Bennett contended. He estimates the U.S. cannabis industry retail sales in 2020 were $17.2B, a 40% increase versus 2019. By 2025, Bennett sees industry sales reaching $36B and $64B by 2030, with an assumption of federal legalization kicking in as of 2026.

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