Analyst: Buy KushCo Holdings On Vaping Weakness

KushCo Holdings Inc KSHB stock has lost 72.21% year-to-date. 

With the company being an important player in the vaping industry, its shares have been hit hard in the last 30 days, with over 1,000 Americans falling ill from a lung disease tied to black market THC vapes.

Nevertheless, some analysts are betting on the company, encouraging share purchases while the price is still low.

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The Analyst

Stansberry Research’s Thomas Carroll reiterated a Buy rating on KushCo. 

The Thesis

KushCo’s shares have been unjustly affected, and the company will end up as one of the winners when the U.S. legalizes marijuana, Carroll said in an Oct. 2 note. 

The vaping crisis highlights the fact that companies like KushCo are more needed than ever, the analyst said.

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Carroll gave four reasons why he believes KushCo is a great contrarian buy at the moment:

1. The current vaping scare will be resolved;

2.  The vaping scare will urge consumers to turn to the legal market and to purchase quality, tested products.

3. Customized product labeling will experience an increase in demand.

“Quality, tested products will want to give you more information, not less, on their packaging. These include comprehensive labels, barcodes and microchips to differentiate products,” the analyst said. 

4. KushCo shares are trading less than 1x sales due to the vape scare's impact on the whole cannabis and e-cigarette market.

“Despite this valuation, 2019 calendar revenue is expected to climb 110% and approach $200 million. 2020 estimates capture slowing growth as current consumers figure out what they want to do. This is positive, as the vape market is unlikely to escape the current fear. Even with the scare, current estimates suggest 47% growth.”

Price Action

KushCo shares were down 1.2% at $1.65 at the time of publication. 

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