In some ways this has been a year to be forgotten in American cannabis as stocks have been beaten across the board. At the same time, business is booming as more states open up to legal weed and businesses expand their stable of pottery shops from coast to coast. In this kind of environment, a potential opportunity awaits investors. Right here, Cantech Letter gives you three names with recent positive reviews in the space.
1. Cresco Laboratories (Cresco Labs stock quote, charts, news, analysts, financial data CSE: CL)
Market capitalization: $ 2.7 billion
2020 revenue: $ 476 million
Yield since the beginning of the year: -20%
Cresco Labs is a Chicago-based company that is vertically integrated with growing, manufacturing, and retail facilities across the United States. Like the other names on our list, Cresco is a multi-state operator, with business in ten states, with 44 cannabis dispensaries and more. The company has expanded its empire through states like Florida where it has 12 stores, Pennsylvania where it recently acquired three high-performing outlets, and Illinois where it recently relocated its flagship Sunnyside dispensary next to Wrigley. Field. In 2020, Cresco made a major acquisition in Origin House, a California-focused producer and brand company.
All of this expansion has taken its toll on the company’s bottom line, with Cresco posting quarterly revenue of $ 215.5 million in its last report in mid-November, up 41% year-on-year. the other. On adjusted EBITDA, Cresco’s third quarter was $ 56.4 million, up from $ 40.2 million a year earlier. (All figures are in US dollars, unless otherwise noted.)
Because the United States still has marijuana as a Schedule 1 drug at the federal level, the multi-state nickname for companies like Cresco means that the cultivation and production capacity in different states is becoming more important. And on that front, Cresco is ahead of the competition in its home state of Illinois, according to Beacon Securities analyst Russell Stanley, who recently commented on Cresco and a legal dispute in Illinois regarding the licensing of retail cannabis sales. Stanley said that eventual resolution of the issue would likely result in the issuance of 185 additional adult retail licenses to go with the 110 currently available, a potential boon for Cresco.
“This will significantly expand the addressable wholesale market. Cresco is unique in having three of the 22 state-licensed grow / manufacture facilities (only one other company has more than one), so is uniquely positioned to benefit from the development of these licenses, ”wrote Stanley. in a December 10 report to clients.
2. Curaleaf Holdings (Curaleaf Holdings stock quote, charts, news, analysts, financial data CSE: CURA)
Market capitalization: $ 8.3 billion
2020 revenue: $ 626.6 million
Yield since the beginning of the year: – 23%
Curaleaf is another major player in cannabis in the United States, which currently operates in 23 states across the country with 22 grow sites, more than 30 processing sites and 113 dispensaries. Curaleaf, based in Wakefield, Mass., Has just opened its 38th outlet in the hot Florida cannabis market, while on the acquisition front, the company recently acquired Arizona-based Tryke, a private operator. multi-state with business in Arizona, Nevada and Utah and a wide range of brands covering flowers, concentrates, edibles, CBD products and more. The Tryke deal, concluded in early November, was worth $ 286 million.
As with many stocks in the industry, Curaleaf has been on a roll for much of 2020 where it ended the year with a return of 86%. The CURA continued to climb during the first month and a half of 2021 before embarking on a long descent from which it has not yet recovered. From its peak of around C $ 22 in February, the CURA is now down about half to C $ 11.
But that kind of pullout should spark investor interest, according to portfolio manager Brian Madden of Goodreid Investment Counsel, who says the move to the federal level in the United States is coming and names like Curaleaf will benefit greatly.
“This is an emerging growth industry and we think it will be a very big industry over time,” Madden said in a segment of BNN Bloomberg in early December. “And we think Curaleaf is going to be one of the dominant players in this industry over time, so we keep buying it, we like the hindsight, the valuation has come back to a less demanding level and, really, if we peel off the diapers and try to figure out why is this a rollback, the whole industry has [pulled back]. “
3. Columbia care (Columbia Care Stock Quote, Charts, News, Analysts, Financial Data CSE: CCHW)
Market capitalization: $ 1.4 billion
2020 revenue: $ 179.5 million
Return since the beginning of the year: -51%
The latest is New York-based Columbia Care, which currently operates across 18 U.S. jurisdictions, including 99 dispensaries and 32 growing and manufacturing facilities. Columbia Care has recently experienced strong revenue growth in a number of states including Florida, Illinois, Maryland, New Jersey and New York. On the mergers and acquisitions front, last month Columbia Care acquired Colorado-based Medicine Man, bolstering CCHW’s presence in what is billed as the world’s second largest cannabis market after California.
Regarding Columbia Care’s growth prospects, Paradigm Capital analyst Corey Hammill said the company looks solid with its expansion into key markets such as New York, New Jersey and Virginia, which have not legalized recreational cannabis than last year, which is a lot of trail ahead.
“With its production developments and major acquisitions soon to be in the mirror, CCHW will enter 2022 as an operator uniquely positioned in the US market, given its exposure to a wide range of high value jurisdictions.” Hammil said in a Nov. 15 research report. “The upcoming integration of recently acquired assets and the company’s competitive advantage in adult-oriented products and services, coupled with the lucrative market opportunity, offers CCHW the potential to generate half a billion in annual revenue.” over the next five years. “