Sundial Growers (NASDAQ:SNDL) has been one of the most fascinating corporate turnarounds of the past year. A little over a year ago, SNDL stock was trading for less than 14 cents and the company seemed to be on the brink of bankruptcy. Then the Reddit WallStreetBets phenomenon happened. SNDL stock exploded in a massive short squeeze, shooting up 560% in a two-week period in early 2021.

The company was able to use that momentum to issue a ton of new stock. Sundial took care of its debt and ended up with a massive cash position. The focus shifted from its struggling legacy cannabis cultivation operation toward the broader view of what Sundial would do with its newfound cash.

However, investors haven’t given Sundial much credit yet. The perception still seems to be that Sundial is a washed-up company that tried and failed to establish a meaningful marijuana business during the first wave of the Canadian cannabis market. SNDL stock has slid further into penny stock territory in recent months and is currently trading around 65 cents.

Now, though, the narrative could change in a hurry thanks to a huge acquisition.

Sundial Snaps Up Alcanna

Earlier this month, Sundial announced it will purchase Alcanna (OTCMKTS:LQSIF), Canada’s largest private liquor retailer. Sundial will be paying $346 million Canadian ($280 million) in an all-stock deal, which works out to $9.12 Canadian per share.

Sundial will get two key assets as part of this deal. It gets Alcanna’s 171 liquor stores, which primarily operate in western Canada with a particular focus in the province of Alberta. This will give Sundial a large recurring revenue base.

In addition, it gets Alcanna’s majority stake in Nova Cannabis (OTCMKTS:NVACF). Nova Cannabis is a chain of retail marijuana stores. Alcanna used to own all of it but spun off a minority stake to outside shareholders earlier this year. Nova Cannabis has not been particularly successful under Alcanna’s watch. However, Sundial might be able to change that with its greater financial resources.

This deal thus gives Sundial two things. First, it gets a large existing operating business. Second, it gets an interesting fixer-upper asset in the cannabis space where it can deploy some of its existing cash balance.

How Alcanna Improves Sundial’s Outlook

For years, Alcanna earned fat profits and paid a large dividend to match. Unfortunately, it ran into a bit of trouble when oil prices crashed in 2014. Alcanna is heavily tied to Alberta’s economy, and Alberta is powered by the oil industry. The decline in the energy sector caused a slump in sales for Alcanna.

Still, this is historically a solid business. And now, with oil and natural gas hitting their highest prices in the better part of a decade, things should be looking up for the Alberta economy once again as well. All good news for Alcanna, and now Sundial.

Alcanna saw sales surge during the pandemic as restaurants and bars were forced to close and people dined and entertained more often at home. While it is generating red ink right now, those figures, notably, include the loss-making but rapidly growing cannabis retail business. Back that out and you’re getting a stable beer, wine, and liquor store business along with a nice upside option in the marijuana stores.

This offers a lot to Sundial. For one, it gets some reliable core cash flow from a diversified source. This reduces the company’s dependence on the cannabis market and the whims of regulators. It should also help get SNDL stock on more people’s radar since Sundial becomes an operating business story from this point forward rather than being primarily a balance sheet play.

SNDL Stock Verdict

Is SNDL stock the single best way to invest in the cannabis industry? Probably not. Some of the U.S. multi-state operators (MSOs) look particularly compelling as straight marijuana growth stories.

However, for a diversified company with holdings in marijuana retail, specialty cannabis financing, and now liquor, Sundial is intriguing. The company has resolved its balance sheet issues with its stock offerings and is now almost an entirely different company from what it was a year or two ago.

Yet, SNDL stock continues to hang under a dark cloud, even as the company has transformed itself. At some point, investors should wake up and start to give Sundial credit for its new and more promising strategic direction. It will still take time, but the company is on the right path now.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.