Alcanna Inc (OTCMKTS: LQSIF) is a fundamentally attractive investment in spite of a price slump in 2018. The stock has bottomed-out of all-time lows, as it continues to rise in a steady but sure pace. A 30% plus rally has since catapulted the stock to a critical level.
LQSIF Catalysts And Price Analysis
The spike comes on the heels of the Company delivering impressive Q1 financial results. Same-store sales growth in the quarter underscored Alcanna transformation into a growth-oriented company. The Company has since inked strategic partnerships as part of an effort of strengthening its growth prospects.
One of the partnerships has since resulted in the acquisition of twelve stores from Ace Liquor Corporation, expected to accelerate sales growth. Expansion into new markets with the launch of an express delivery app has also come into play as the Company continues to strengthen its streams of revenue.
The Company has also strengthened its financial position with the closing of a $70 million credit facility. With a solid balance sheet, the company remains well positioned to execute on strategic initiatives that have the potential to accelerate core business growth.
Investor’s reaction to the string of positive development has been swift, as the stock has continued to trade in an uptrend. Pullbacks have so far provided entry positions from where bulls have come in and continued to push the stock up.
A spike to the $4.38 level leaves the stock exposed to the $5 technical level. A surge followed by a close above the technical level should reaffirm the stock’s break out credentials. Above the $5 mark, bulls would be in control and could push the stock to the $7 mark the next substantial support level.
About Alcanna Inc
Alcanna Inc is one of the biggest retailers in North America. The Company retails beers and spirits. In the recent past, the company has diversified its footprint having expanded operations into the distribution of cannabis for medical and recreational use. It currently operates 236 locations in Alberta, British Columbia, and Alaska.
Same-Store Sales Growth
After a period of consolidation, Alcanna shares have started inching higher on the giant retailer delivering solid Q1 results that underscore underlying growth. Same-store sales in the quarter were up 6.2% in Canada and 6.3% in Alaska. Total sales in the quarter were up 16.2% year-over-year.
During the quarter, the company achieved significant milestones key among them being the launch of a discount liquor partnership. The Canadian Liquor Retailers Alliance Limited Partnership has since resulted in the acquisition of 12 stores from Ace Liquor Corporation. The acquisition should go a long way in strengthening same-store sales
“Alcanna remains firmly on track to turn our strong balance sheet into a strong generator of cash flow in the medium to long term. These first-quarter results indicate exactly the trend established in the back half of 2018 – that the metrics most important to understanding our strategy and the objectives essential to our future growth continue to be met or exceeded,” said Mr. Burns,” stated CEO James Burns.
In an effort to accelerate sales growth, Alcanna Inc has unveiled a new delivery service for liquor, targeting consumers in Edmonton, Calgary, and Greater Vancouver. The new Express Delivery App will allow the company to deliver up to 700 spirits, beer, and wine. The unveiling of the new delivery app is part of the company’s e-commerce drive, critical to the future development and growth.
$70 Million Credit Facility
The unveiling of the new delivery service comes on the heels of Alcanna Inc securing $70 million asset-based revolving credit facility. Issued by the Canadian Imperial Bank of Commerce the facility includes a $15 million borrowing availability expansion.
“This new credit facility was designed to fit our company’s needs as we execute on transforming Alcanna to a growth company. Not being tied to cash flow covenants and other tests allows Alcanna to invest in areas which will provide the best medium to long term return for shareholders versus having to accommodate short-term targets,” added Mr. Burns.
Alcanna Inc steady rise looks set to continue as underlining fundamentals continue to improve. Same-store sales growth followed by the acquisition of new stores all but affirms the Company’s growth metrics. The unveiling of new delivery service as part of an e-commerce drive should accelerate sales growth.
The Company should have an impressive year on securing a $70 million credit facility for pursuing strategic initiatives. The stock is likely to continue bottoming out as core business continues to grow at an impressive rate.
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Disclosure: We have no position in LQSIF and have not been compensated for this article.