Over the last month, Sunniva (SNN.CN) (SNNVF) has been under considerable pressure and the shares have been trading at very oversold levels. There has been nothing in particular that has been a catalyst for this decline and we think the market is significantly underappreciating the company’s potential.

Sunniva is a leading North American cannabis company that has been executing flawlessly on a plan to construct a large scale production facilities in California and Canada. During the last month, the company has made some significant announcements and we are bullish on the continued execution.

Earlier this month, Sunniva announced plans to spin out its Canadian assets into a separate Canadian entity and apply to list the shares on the Toronto Stock Exchange (TSX) and the NASDAQ. Although we think this is a strategic way of creating value for shareholders, the market responded negatively to this announcement and Sunniva has continued to trade lower.

We are monitoring Sunniva and consider this to be one of the most undervalued cannabis stocks in the sector. The company has several levers for growth and we are confident in the management team’s ability to execute. This is a stock that investors need to keep an eye on and today, we have provided some reasons as to why you should be monitoring this company.

Sunniva: A Multi-Faceted Growth Opportunity

Over the last year, Sunniva has been nothing short of an execution story and has made several strategic acquisitions that have already proved to be accretive. We are favorable on the continued success and the potential growth opportunities. Sunniva is in the middle of a major expansion in California and we expect this to be a major value driver for the company.

The California facility will be completed in two phases and will have approx. 490,000 sq. ft. for cultivation. The California cGMP Campus will produce Sunniva branded products and private label solution for leading brands. Sunniva expects 50% of the facilities cultivation to be initially manufactured into higher margin extracted products including extracts.

Last month, Sunniva’s Canadian subsidiary, Sunniva Medical Inc. (SMI), acquired a 126-acre property, which will be the site of the Sunniva’s Canada Campus. SMI plans to build out more than 700,000 sq. ft. of cGMP greenhouses, which could produce more than 100,000 kilograms of premium cannabis flower a year plus higher margin extracted products such as capsules, cartridges, tinctures and creams.

SMI is in the review stage of the Health Canada’s ACMPR application and has a strategic relationship with Canopy Growth (WEED.TO) (CGC). Earlier this year, SMI signed a definitive supply agreement with Canopy to purchase up to 45,000 kilograms of dried cannabis per year. The companies plan to split revenues and we expect this to be a major value driver for Sunniva in 2019 and beyond.

An Undervalued North American Opportunity

Sunniva is one of the few companies to have attractive leverage to the Canadian and United States markets and represents a legitimate long-term player. We think the recent decline is overdone and think that investors need to be monitoring this one. Sunniva trades at an attractive valuation, is led by a proven management team, and has several fully funded growth initiatives.

Earlier this month, Canaccord initiated coverage on Sunniva with a Buy Rating and a $13 price target. This means that Canaccord believes there is more than 130% upside to current levels and we are favorable on this North American opportunity.

Sunniva has already virtually de-risked its business model by leveraging strategic commercial real estate and merchant banking relationships to produce 100,000 kilograms of cannabis dried flower and trim at full capacity. There are very few companies as attractive positioned as Sunniva and this is a stock to keep an eye on.