Like any other developing industry, the marijuana sector is also constantly experiencing some ups and downs. The prospects for legalization helped the sector soar last year, but legislative delays have clouded those dreams.
This does not mean that investors should avoid marijuana stocks entirely. The industry is still growing rapidly (whether legalization occurs or not), and local cannabis companies will continue to expand aggressively.
Despite being strong companies, some of these cannabis company stocks have suffered from recent industry sell-offs. But make no mistake: This industry has huge potential, making these three stocks a sure buy that could make investors wealthy in the long run.
1. Green thumb industries
based in Illinois green thumb industries (UTC: GTBIF) It is one of the strongest cannabis stocks at the moment. In addition to its 73 operating dispensaries, the company has 114 additional retail store licenses in 14 US markets.
Why is this important? Cannabis is still illegal federally, so states are keen to issue licenses; It is also a tedious process. This means that obtaining additional licenses gives Green Thumb a significant competitive advantage over its peers.
However, the company has not yet revealed how and when it plans to use these licenses. But when that happens, it will have a stronghold on the US cannabis market. End 2021 with the acquisition of Minnesota-based LeafLine Industries. This acquisition expanded its national presence to 15 states, with 73 retail stores opening across the country.
An increase in traffic from 65 stores (at the end of the third quarter) led to another strong quarter. Total revenue increased 49% to $233.7 million compared to the same quarter last year. The third quarter also marked the fifth consecutive quarter of profitability for Green Thumb. mentioned GAAP Net income of $20.8 million compared to a net profit of $9 million for the same period last year.
The company opened 15 new stores in 2021. It will be interesting to see how many stores opened this year, given its continued rapid expansion. The company has made good use of its home state, a new cannabis market that legalized recreational marijuana in 2020. Recreational sales in Illinois reached $1.3 billion for the year.
Green Thumb closed the quarter with cash and cash equivalents of $285.8 million and total outstanding debt $206.5 million.
2. Coralive Holdings
Based in Massachusetts Koralif Holdings (Outside the cabin: CURLF) Not a profitable cannabis stock just yet, but with full-year revenue approaching $1 billion, it won’t be long before the company starts enjoying the profits. The company announced in late December 2021 that it would acquire Bloom Clinics, which would increase the number of its stores to 16 stores in Arizona as well as 128 stores nationwide. Curaleaf has been smart to expand its footprint in Arizona, which recently legalized recreational marijuana.
Curaleaf making strategy Timely acquisitions He has been working for her for the past two years. In its recent third-quarter results, the company showed revenue jumping 74% year-over-year to $317 million. Its adjusted EBITDA was $71 million, compared to $42 million in the prior year quarter.
Although the acquisition spree continued, Curaleaf also maintained a stable balance sheet. It closed the third quarter with $317 million in cash and $342 million in outstanding debt (after deducting unamortized debt discounts). The company remains confident that it will generate full-year revenue at the lower end of the $1.2 billion to $1.3 billion range, which may also help it achieve profitability this year.
3. Crisco Laboratories
based in Illinois Crisco Laboratories (Outside the cabin: CRLBF) It doesn’t have as wide a presence as Green Thumb and Curaleaf yet. But even with only 45 stores, the company is catching up.
Crisco Target markets with limited licensing such as Pennsylvania, Illinois, Ohio, and… Help her create brand awareness for her brands like Mindy’s Edibles, High Supply, and more. It allowed the company to be able to compete with the largest multi-state players. The company has also benefited from the cannabis boom in its home market in Illinois, where it operates 10 dispensaries.
The company grew revenue 41% year-over-year to $215 million in the last third quarter of 2021. It generated $106.2 million in retail revenue in the third quarter, with the remainder coming from wholesale revenue. Cresco also reported adjusted EBITDA of $56 million, compared to $40 million in the same quarter last year. The company posted a net loss of $263,000 in the quarter that disappointed investors, compared to a net profit of $25 million in the third quarter of 2020. Management stated that “the company’s exit from third-party distribution agreements in California” caused the non-cash depreciation At about $290. million that led to the loss.
However, Cresco reaffirmed its guidance for 2021. The company still expects:
- Revenue is in the range of $235 million to $245 million for the entire year.
- Adjusted EBITDA margin of 30% for 2021.
- Gross profit margin above 50% for the rest of 2021.
Cresco closed the quarter in cash and cash equivalents of $252.8 million, This allows it to continue with its expansion plans. In December, it opened its thirteenth store in Florida, bringing the store total to 45 stores nationwide.
Are these stocks right for you?
Investors are skeptical marijuana stock Now, but Wall Street remains optimistic. Growth stocks take time to show their full potential; A little patience is required. Analysts see gains of 77%, 127% and 142% for Green Thumb, Curaleaf and Cresco Labs shares, respectively, in the next 12 months. All three betting stocks are trading more than 50% below their 52-week highs, making it a good time to include them in your portfolio.
Disclaimer: This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.