Is SNDL Stock a Good Buy?

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SNDL Inc. (SNDL) is an American cannabis company. Earlier this month, it announced a plan to acquire the Canadian firm Valens Co. Inc. for about $105.9 million. SNDL will pay $0.3334 of its stock for each Valens share. The deal is expected to close in the second quarter of 2019.

SNDL stock doesn’t offer investors many reasons to invest. Although acquisitions increase the top line of a company, they can add complexity and tie up capital in unprofitable ventures. In addition, large businesses tend to spin off certain segments of their operations, and some conglomerates even successfully incorporate new companies.

Despite the controversy over the reverse split, SNDL stock is now worth a closer look. The company is the largest distributor of liquor and cannabis in Canada and currently operates 354 retail locations. Despite this, recent stock prices give a negative value to the company’s residual cannabis operations. Despite these risks, SNDL has a solid balance sheet and a low risk profile.

Although SNDL has become a renowned cannabis company, it also has several non-cannabis businesses. In fact, SNDL’s liquor retail business, which made up 66% of its total net revenues, is the main profit driver. It has also increased its retail presence through acquisitions.

While SNDL hasn’t been a great buy in the past, the company has changed dramatically since it acquired Alcanna. It now focuses more on alcohol than cannabis. In the last quarter, it reported total revenue of 223.7 million Canadian dollars, of which 148.6 million was from retailing liquor.

The company operates through four segments. Liquor Retail includes the sale of wine, beer, and spirits. It also operates in the cannabis industry, with products such as Lemon Riot, Zen Berry, and Citrus Punch. The company has also expanded into investments. Its cannabis business is one of Canada’s fastest-growing sectors.

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