The Cannabis industry has been booming over the past years. New companies are being formed every day; some of them are doing very well, others not so much. This got me thinking: if new companies are being formed every day, why is it that some have done so well, where others haven’t? It seems the key is to look for companies that have a proven track record of success. The two I’m looking at today are:
Summer’s just around the corner, so now is a great time to pick up some of the top cannabis stocks on the market, especially if you haven’t bought in yet. Although the cannabis industry has been a hot topic on Wall Street for the last few years, it’s taken a few years to get to the point where you can easily invest in stocks that are soaring to new heights. As the cannabis sector becomes more mainstream, we expect to see even more growth, and we expect to see that growth rise even higher over the next few years.
In the past, I have recommended two stocks that I think are going to be popular this summer. I wanted to tell you about them, so here they are:. Read more about hydroponic stocks 2021 and let us know what you think.The marijuana boom in the context of the coronavirus pandemic has drawn attention to this sector. Cannabis sales have been on the rise since marijuana was recognized as a vital necessity during pandemic-related work stoppages. This has not only benefited the revenue and profits of U.S. cannabis companies, but also companies indirectly related to the cannabis sector. As more and more states legalize marijuana for medical and/or adult use, hopefully sales will increase. According to the BDSA, annual sales in the US cannabis market could reach $41 billion by 2026.
Here are two cannabis stocks that are great bargains for the summer of 2021. One of them is a company whose sole business is cannabis (i.e. its main activity is the production and sale of cannabis and cannabis-related products) and which wants to become a major competitor in the US market. The other is a non-traditional action that is not directly related to cannabis, but benefits from the marijuana tree.
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Trulieve Cannabis – a rising star in the US cannabis market
Florida-based Trulieve Cannabis (OTC:TCNNF) is a vertically integrated operator that operates in multiple states. Vertical integration allows the company to control the supply chain, which has contributed to its tremendous growth even during the global crisis.
The company already dominates the medicinal cannabis market in its home state with 78 dispensaries. Only medical cannabis is legal in Florida, and the company has a 50% market share in the state. But with the recent acquisition of Arizona-based Harvest Health & Recreation, the company plans to expand, and the latest results for the first quarter, which ended on 31… The end of March is proof of that.
Revenues increased 102% year-over-year to $194 million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $91 million, an 87% increase over the prior year. The company also reported a 27% increase in net income from the previous quarter to $30 million. EBITDA measures the operating performance of a company, while net income is the actual profit of a company after all deductions.
Trulieve acquired Harvest Health in May in a deal worth $2.1 billion that is expected to be completed in the third quarter, subject to shareholder approval. The acquisition will allow Trulieve to enter the cannabis market in Arizona, where recreational cannabis was recently legalized. The agreement adds clinics in Pennsylvania and Maryland to Trulieve’s national presence. In total, the company will have access to 126 clinics in 11 states, giving it a presence in most parts of the United States.
For 2021, Trulieve expects the combined company to generate approximately $1.2 billion in revenue and $461 million in adjusted EBITDA. These strong companies have pooled their resources, capital and innovative products, and the resulting company could soon become a cannabis superpower.
Innovative Industrial Properties provides indirect access to the cannabis sector
Marijuana remains illegal at the federal level in the United States, which could deter many investors from making a significant impact on the sector. But there is a real estate investment trust (REIT) that offers an indirect route into the cannabis market. The illegal status of marijuana can make it difficult for U.S. cannabis companies to obtain financial capital, preventing them from building large-scale production facilities. Innovative Industrial Properties (NYSE:IIPR) is a REIT that buys properties from medical cannabis companies and then leases them out. Cannabis companies receive capital and Innovative Industrial Properties receives revenue.
In the most recent first quarter (ended March 31), Innovative’s total revenues increased 103% year-over-year to $43 million. During this period, the Company completed four new acquisitions (three new properties and one land extension on an existing property). The company’s net income increased to $26 million from $12 million in the same period last year, and adjusted operating income (AFFO) increased 117% to $38 million in the quarter. Because Innovative is a REIT, AFFO is a key metric for determining the amount of cash that can be distributed to shareholders as dividends, just as net income is a metric for a non-REIT company.
And that brings me to another advantage of these stocks: their dividend yield, which is about 2.9%, almost double the average of the S&P 500. As a REIT, the company is required by law to pay out 90% of its profits as dividends; AFFO’s growing numbers prove that it does so regularly, which is at least as important as its high yield. The 15th. In June, the company announced a 32% annualized increase in its quarterly dividend, bringing the payout to $1.40 per share. This is the company’s 11th dividend increase since its IPO in 2016.
Volatility in an emerging industry is common, and the fact that the company is not directly involved in marijuana insulates Innovative Industrial Properties from what makes it a good cannabis-related investment stock. Once the drug is federally legalized in the United States and cannabis companies can get capital in other ways, Innovative may face some challenges. But right now, as legalization continues to gain a foothold in the state, Innova is about to expand.The cannabis industry is a very exciting one, it has grown rapidly in the last few years and has expanded into the mainstream. The past few years have seen the industry grow from a small, underground industry into a highly regulated and accepted one across the globe. But there is still so much to do and this is what it is about; taking advantage of the skyrocketing growth in the industry towards a fully legalised, regulated and publicly traded cannabis company.. Read more about buy cresco lab stock and let us know what you think.
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