Cannabis Lighting Firm Could be Ready to Shine

07/05/2019 9:11 am EST

Focus: CANNABIS

Jimmy Mengel

Editor, Outsider Club

A recent European conference on cannabis has set the stage for growth in the sector and revealed a potential diamond in the rough notes Jimmy Mengel, editor of The Crow's Nest.

The European Cannabis Symposium in Copenhagen, Denmark was a who’s who" of the European cannabis market. I learned a lot about what it is going to take to get the European market moving.

Mads Ulrik Pedersen, CEO of Aurora Nordic Cannabis – a European arm of Aurora Cannabis Inc. (ACB) — outlined the path to profitability for Aurora in Europe, and why the big Canadian companies have a massive advantage in the nascent market.

Jan Witter, Medical Director of Aphria (APHA) Germany, became a medical cannabis enthusiast after working with cancer patients as an oncologist was at the event. Germany is set to become Europe’s largest medical market, and Witter believes that as research emerges, we’ll see more investment.

I also caught up with representatives of Heliospectra (HLSPY), a world leader in intelligent lighting technology for greenhouse and controlled plant growth environments. HLSPY is a Crow’s Nest recommended stock, which has been kicking around our portfolio for a couple of years now — and hasn’t done much.

After speaking with management, it seems like they could offer an interesting play on the growing cannabis space. CFO Hans Naess and Grower Liaison Ryan Wankel discussed at length where the company is headed, why their lights are so cost effective and a brand new software platform that could be a big seller for Heliospectra going forward.

While Heliospectra has not been a strong performer, it’s trading cheap right now, and the software platform could give them an edge as more and more cannabis companies have the capital to invest in intelligent, effective lighting.

Their Heliospectra’s helioCORE light control system mentioned in the interview, was recognized by the American Society of Agricultural and Biological Engineers with a 2019 AE50 Award. Heliospectra expanded into North American markets with formation of Heliospectra Canada, Inc. in Toronto.

The company also continues to scale Heliospectra’s executive leadership, sales and technical services teams with business units dedicated to commercial food producers and licensed commercial cannabis operations in both the United States and Canada.

HLSPY has a market cap of $37.3 million and a 52-week-range of $0.45 to $1.05. I wouldn’t pay more than 85¢ until we see how their Canadian expansion goes, and as they begin monetizing their new software systems. This is a small cap, so assume a certain degree of risk.

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