It’s amazing to think that it’s been almost a year since the Cannabis industry began it’s steady march toward legalization. The industry has grown at an exponential rate since those early days, and there is no sign of the growth slowing down anytime soon. Companies like Canopy Growth, Aurora Cannabis, and Aphria are on the cutting edge of cannabis technology and innovation, and their products are well on their way to becoming household names.
These 3 Cannabis Companies Are Poised for Big Gains There is a lot of hype in the marijuana industry. Will it all translate into success? You can’t necessarily know the answer until you look at the top companies in the space. Let’s take a look at the three biggest names in the cannabis industry today.
It’s almost legal to buy, sell and smoke weed in Canada, but the path to profitability isn’t quite as straightforward as people might think. While the federal government has promised to legalize recreational cannabis in July, there’s still a lot of uncertainty surrounding how the market will shape up once the ban on dispensaries is lifted.. Read more about cbd stocks to watch and let us know what you think.
- Revenues are rising for Cresco Labs, Curaleaf Holdings, and Green Thumb Industries.
- All three were recently added to Jefferies’ coverage, with buy ratings and aggressive price targets.
The legal cannabis business in the United States is here to stay, as has been said a hundred times. There are three businesses that have been busy building huge footprints throughout the nation in expectation of massive profits one day, among all the mom-and-pop stores and multi-state operators (MSOs).
As vertically integrated operators, Cresco Labs (OTC:CRLBF), Curaleaf Holdings (OTC:CURLF), and Green Thumb Industries (OTC:GTBIF) all have licenses in several states, encompassing all elements of the company from cultivation to retail chains that sell their cannabis products.
All three companies set revenue records in 2020 and the first quarter of 2021, and they are mostly focused on limited-license states like Virginia, Florida, and Pennsylvania, which lowers competition challenges in their core markets. And they’re all worth serious attention by investors.
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Increasing the scale of activities
When it comes to a company’s scale, larger isn’t necessarily better for investors.
The smallest of the three is Cresco. It employs 2,300 employees and operates in ten states, seven of which include retail outlets. Its retail presence is strongest in Illinois (10 dispensaries), where it is based. In Pennsylvania, it just launched its fourth branch, a medical-only retail shop. In addition to its 33 company-owned dispensaries, Cresco has wholesale distribution agreements in place that allow its 350 products to be sold in over 700 additional locations throughout the country.
Curaleaf, located in Massachusetts, is on the other extreme of the scale. It employs 4,600 people in 23 states, with retail outlets in 17 of them. Its 37 retail outlets in Florida, its top retail market, outnumber Cresco’s total in the United States. The company’s 107 dispensaries are located from coast to coast in the United States.
In terms of size, Green Thumb is in the center. The business, like Cresco, is headquartered in Illinois and operates numerous dispensaries in both its home state and Curaleaf’s home state of Massachusetts. It employs 2,700 people and operates in 13 different areas, with 32 dispensaries and permits for 110 retail outlets.
The Rise network, which has locations mainly in Pennsylvania and Illinois, makes up the majority of Green Thumb’s retail shop presence. Green Thumb also recently purchased Dharma Pharmaceuticals in Virginia, which included a vertically integrated license, a manufacturing plant, and an operational dispensary. It also has the option to establish five more dispensaries in Virginia, which has become a crowded industry. Columbia Care, a veteran of the medical cannabis industry, acquired one of the state’s only five vertically integrated operations licenses this year.
Increasing revenue
Whether the COVID-19 pandemic, greater availability of cannabis products, or a combination of the two drove the legal cannabis market’s development, sales in the United States skyrocketed in 2020 and continue to do so.
Curaleaf’s yearly sales was $626 million, increasing 184 percent from the previous year. This was driven by a 75% increase in the number of retail, cultivation, and processing locations, as well as a 75% increase in the number of states it serves. It followed up with $260 million in sales in the first quarter of 2021, increasing its gross profit margin by 6% year over year.
Green Thumb’s sales increased by 157 percent to $556 million in 2020, while revenue of $194 million in Q1 2021 increased by 89.5 percent year over year. This was also the company’s third quarter of positive net income ($0.05 per share).
Cresco had the largest percentage gain in 2020, up 271 percent to $476 million, and established a new quarterly record of $178 million in Q1 2021, up 168 percent year over year. According to management’s projections, the business will generate $1 billion in total sales in 2021.
Notably, all three of these businesses have sufficient capital on hand to continue their meteoric rise far beyond 2021, as the market continues to consolidate.
An expert’s view
Jefferies analyst Owen Bennett started coverage on these three companies in early July, assigning buy ratings and bullish price goals to each. Cresco has the greatest potential for investors based on those goals. It’s presently trading at about $11, implying a 155 percent return if it hits Bennett’s target price of over $28.
Based on Bennett’s price objective of $25.50, Curaleaf’s stock price, now hovering around $14, provides an 84 percent upside. Green Thumb presently has a potential gain of 71 percent based on its current price of $32 and a target price of $55.
The food that was delivered
Green Thumb may be the best choice among these three if you’re seeking for a business that has shown it can generate net profits. However, as the sector develops and demand increases for marijuana legalization at the federal level in the United States, there are strong reasons to include all of them in your portfolio. Keep in mind that those recent income growth rates were accomplished despite the fact that cannabis is still illegal on the federal level. Consider what these companies might achieve if the headwind was eliminated.
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