These 3 Cannabis Companies Are Ready For Big Gains
It has been said a hundred times: the legal cannabis industry in the United States is here to stay. Among all the mom-and-pop stores and multi-state operators (MSOs), there are three companies that have been busy establishing big footprints across the country in anticipation of massive gains someday.
Cresco Laboratories (OTC: CRLBF), Curaleaf Holdings (OTC: CURLF), and Green thumb industries (OTC: GTBIF) all of them are licensed in multiple states as vertically integrated operators, covering every aspect of the business, from grow operations to retail chains that sell their cannabis products.
All three also generated record revenues in 2020 and the first quarter of 2021, and are largely focused on limited license states such as Virginia, Florida, and Pennsylvania, reducing competitive threats to their businesses in their markets. keys. And all of them deserve serious consideration from investors.
Ramping up of operations
When it comes to business size, bigger doesn’t always mean better for investors.
Cresco is the smallest of the three. It is present in 10 states, including seven with dispensaries, and employs 2,300 people. Its largest retail presence is in Illinois (10 dispensaries), where it is headquartered. It recently opened its fourth location in Pennsylvania – an exclusively medical retail store. And beyond its 33 company-owned dispensaries, Cresco has wholesale distribution agreements that bring its 350 products to more than 700 other storefronts nationwide.
Massachusetts-based Curaleaf falls on the opposite end of the size spectrum. It has 4,600 employees and operates in 23 states, with dispensaries in 17. In its # 1 retail market, Florida, its 37 outlets exceed Cresco’s US total. The company’s 107 dispensaries are located coast-to-coast in the United States
The green thumb falls down the middle, in terms of size. Based in Illinois like Cresco, the company has several dispensaries in its home state as well as in the home state of Curaleaf, Massachusetts. It operates in 13 markets in total, with 32 dispensaries and licenses for 110 outlets, and currently employs 2,700 people.
The biggest part of Green Thumb’s retail store footprint is its Rise chain, which has locations primarily in Pennsylvania and Illinois. Green Thumb also recently acquired Dharma Pharmaceuticals in Virginia, which brought with it a vertically integrated license, production facility and operational dispensary. It also owns the rights to open five additional dispensaries in Virginia, which has become a very competitive market. Medical cannabis veteran Colombia treatments also made an acquisition there this year that gave it one of five licenses for vertically integrated operations in the state.
Whether the growth of the legal cannabis market has been accelerated by the impact of the COVID-19 pandemic, greater availability of cannabis products, or a combination of both, sales in the United States have skyrocketed in 2020 and continue to do so.
Curaleaf generated annual revenue of $ 626 million, up 184% from 2019. This was fueled by a 75% growth in its number of retail, growing and processing sites, as well as by a 75% growth in the number of states in which it operates. . It continued with revenue of $ 260 million in the first quarter of 2021, increasing its gross profit margin by 6% year-over-year.
Green Thumb revenue grew 157% to $ 556 million in 2020, and the company continued with revenue of $ 194 million in the first quarter of 2021, up 89.5% from one year to the next. This result also gave it its third consecutive quarter of positive net income ($ 0.05 per share).
Cresco recorded the biggest percentage jump for 2020 – up 271% to $ 476 million – and set another quarterly record of $ 178 million in the first quarter of 2021, a 168% year-over-year increase on the other. According to management forecasts, the company will reach total revenue of $ 1 billion in 2021.
Notably, all three of these companies have the cash flow to continue their scorching growth well beyond 2021, as consolidation continues to shape this evolving market.
An analyst opinion
In early July, Jefferies analyst Owen Bennett launched a hedge on all three stocks, giving each of them bullish buy ratings and price targets. Based on these goals, Cresco offers the most potential for investors. It is currently trading at around $ 11, so if it hits Bennett’s target price of over $ 28, that would result in a 155% gain.
Curaleaf’s stock price, hovering around $ 14, offers an 84% rise based on Bennett’s price target of $ 25.50. And Green Thumb is currently offering a potential payout of 71% based on its current price of $ 32 and a target of $ 55.
If you are specifically looking for a business that has shown they can show bottom line profits, Green Thumb might be your best option out of these three. But there are compelling arguments for adding them all to your portfolio as the industry grows and the pressure increases for the legalization of marijuana at the federal level in the United States. Keep in mind that these recent revenue growth rates have been achieved even in an environment where cannabis has not been federally legalized. Imagine what these companies could do without this headwind.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.