The Motley Fool

Should I buy Cellular Goods shares in my portfolio?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

3D Word IPO with Target on Chalkboard Background
Image source: Getty Images

Cellular Goods (LSE: CBX) shares listed last Friday on the London Stock Exchange through an initial public offering (IPO). It joins cannabis companies such as Kanabo and MXC Pharmaceuticals that have come to market recently.

Normally I don’t consider IPOs as there’s limited information to make an informed investment decision. But I couldn’t resist looking at this one. So here’s my take on the stock.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

What does Cellular Goods do?

In a nutshell, Cellular Goods sells cannabis-related products to consumers. In fact, it’s focused on creating synthetic CBD products. This means that the CBD is created in the lab rather than extracted from the cannabis plant. CDB has been used to treat a wide range of conditions. Inflammation, pain relief, anxiety, depression and insomnia are just a few of them.

I think there are a few things that sets Cellular Goods apart from the other cannabis companies that have come to market of late. Firstly, this is London’s first listed ‘pureplay’ consumer CBD company.

Unlike its peers, Cellular Goods makes no medical claims on its products. In the long term I reckon this may hinder the company in the face of future competitors as there’s no intellectual property. Like many consumers, I’d rather buy products that are backed and supported by proven medical science.

So what are the products?

I should stress that Cellular Goods, at present, hasn’t sold any products. The company is therefore pre-revenue and loss-making. The products are due to launch later this year. According to the website, they’ll be available in September 2021. To me this would be a risky investment as the company’s CBD products haven’t been proven to sell yet.

Cellular Goods is focusing on two product lines. The first being high-end skincare and the second is athletic recovery products. It’s launching with three synthetic CBD products: a face mask, a daily skin serum and a topical sports recovery gel that will be applied via a touch-free roll-on applicator.

The products will be sold direct-to-consumer through the Cellular Good’s website and through physical retail partnerships.

Significant shareholders

The footballer-turned-global celebrity David Beckham owns 5% of Cellular Goods through his DB Ventures firm. I reckon this is one reason why the IPO has received a lot of attention.

The fact the company is associated with the current buzz ingredient, CBD, has probably also helped. But my opinion of the stock won’t be swayed by a high-profile celebrity who has been an early-stage investor.

Cellular Goods shares: would I buy?

Cellular Goods could be successful, but it’s too speculative and risky for me. Its products haven’t been proven to sell to consumers yet. Therefore it’s incurring costs and has no profit.

That said, CBD is in demand right now, especially in the beauty industry. This, combined with the Beckham link, and the possibly-savvy decision to launch a sports-linked product, could be a winner for Cellular Goods. I guess time will tell. But I think there’s a lot of hype around the company and I’m waiting for this euphoria to subside.

I would like to see the company deliver trading updates and results as a public company. That way, I have more information to make an informed investment decision on. So for now, I’m sitting on the fence and monitoring Cellular Goods shares.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.