While the song says that New York is the place where if you can make it there, you can make it anywhere, the reality is that Las Vegas can claim that moniker as well. If you can manage to succeed as a restaurant operator, a retailer, a casino/hotel company, or an entertainment venue in Sin City, it’s pretty likely you can be successful anywhere.
That’s because Las Vegas not only attracts the best of the best, it’s a city — well at least the Las Vegas Strip and Fremont Street areas are — powered by tourists. Any establishment that makes it in Las Vegas has to prove itself over and over in a market dominated by major players including Caesars Entertainment (CZR) – Get Caesars Entertainment Inc. Report, MGM Resorts International (MGM) – Get MGM Resorts International Report, and Wynn Resorts (WYNN) – Get Wynn Resorts Limited Report.
Las Vegas, however, does offer some unique conditions. New York, for example has a lot of tourism, but that’s not what’s fully driving the city’s economy. There are businesses that make sense in Vegas that may not translate to other locations.
The city’s best investment, however, has shown that it can use the lessons it learned operating just off the Las Vegas Strip, and the special lessons it learned during the pandemic to bring its business all around the country.
What Is the Best Investment in Las Vegas?
Planet 13 (PLNHF) may seems like a small player when compared to Caesars, MGM, and Wynn, but long-term investments are often made based on potential, not current performance. And while this cannabis dispensary stock currently trades at $1.15, well off its 52-week high of $7.17, you have to look at what the company has shown it can be (not the macro-economic headwinds that have dragged it down).
In its most-recent quarter, Planet 13 showed steady improvement in most areas.
- Revenues were $25.7 million as compared to $23.8 million, an increase of 8%
- Gross profit was $12.9 million or 50.2% as compared to $13 million or 54.7%
- Net income before taxes of $0.7 million as compared to a net loss of $2.7 million
- Net loss of $2.1 million as compared to a net loss of $6 million
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The reality, however, is you aren’t buying Planet 13 because of what the company is now. If you buys shares it’s because you believe in the company’s ability to export its proven models (a superstore and smaller local market-serving dispensaries along with its own wholesale brands).
Planet 13 Has a Proven Model
Planet 13 has become a massive tourist destination in Las Vegas but it has also served locals with its smaller Medizin brand. In addition, it has captured meaningful market share by selling its owned-and-operated brands to its competitors.
Now, the company has expanded into California, and it has plans to open a superstore in Chicago while adding multiple locations in Florida to serve the license-required medical-use audience. Planet 13 ultimately believes it can operate a superstore in any market that’s big enough to support a pro sports team.
The company has a very long-range plan for growth but it has been steadily achieving it while being protective of its balance sheet.
- Cash of $62.1 million as compared to $61.6 million
- Total assets of $274.0 million as compared to $216.8 million
- Total liabilities of $41.2 million as compared to $43.1 million
“We continue to make progress on our Florida roadmap working in dual tracks to bring cultivation and retail online. We are excited to drive growth throughout 2023 from our Florida operations,” said co-CEO Bob Groesbeck. “In Nevada, we’ve begun the expansion of our cultivation facility to expand supply of our incredibly popular premium flower line.”
Planet 13 has built a destination retail brand while also thriving in a hyper-competitive market to serve locals. It’s Las Vegas superstore has created a model that can be exported to other cities while the company’s operating acumen will help it gain a foothold with its wholesale brands.
It may take years for Planet 13 to grow enough to see its stock price climb, but the company has shown that it has the right mix to succeed and it needs time, plus legal intervention (its Florida plan will benefit from the expected eventual recreational legalization in that state). The company has a long-range plan and it will be well-positioned to take advantage of changing laws in key markets.
TheStreet Managing Editor Daniel Kline owns shares of Planet 13 at the time of publication.