- Trulieve Cannabis (TCNNF): Robust fundamentals, including incredible cash flows, reducing its reliance on debt and dilutive equity.
- Curaleaf (CURLF): Coast-to-coast footprint, a wide range of assets and a stock that trades below industry averages.
- Cresco Labs (CRLBF): Industry-leading margins with a balanced sales approach.
The past couple of months has been tough on marijuana stocks. Despite the vote to legalize marijuana by the U.S. House of Representatives, enthusiasm has died down considerably for cannabis stocks. The market isn’t buying the hype surrounding the second iteration of the Moore Act, which was passed in 2020.
However, this time things could be a lot different. A lot has to do with most Americans favoring the outright legalization of marijuana. Moreover, marijuana taxes contributed a whopping $3.7 billion in extra taxes in legal states.
Hence, 2022 could be a make-or-break year for the cannabis sector. Senate Majority Leader Chuck Schumer states that he will be introducing the bill at the end of April. Hence, cannabis stocks are likely to snap back in the coming months and potentially catch fire once the bill is approved.
|TCNNF||Trulieve Cannabis Corp.||$17.60|
|CURLF||Curaleaf Holdings, Inc.||$6.34|
|CRLBF||Cresco Labs Inc.||$5.21|
Cannabis Stocks to Buy: Trulieve Cannabis (TCNNF)
Trulieve (OTCMKTS:TCNNF) is a medical cannabis giant with a strong foothold in Florida State. Out of 162 of its dispensaries, 113 are located in Florida. Moreover, it operates as the best-in-class marijuana business globally with its stellar fundamentals. It has consistently grown its sales and profits since its inception. In the past 12 months alone, it has improved its top and bottom lines by triple-digit percentages. Additionally, the business has the best track record of profitability.
Trulieve’s key business element is robust profitability and cash flow metrics. Though these metrics can be choppy, they have overall proven to be the company’s strength due to capital requirements. It can effectively leverage its profits into multiple growth areas and has helped reduce its reliance on dilutive equity and debt.
It reportedly raised $425 million at just 8% interest recently, while its peers have borrowed at over 10%. As we advance, the marijuana giant is in a pole position to benefit from multiple tailwinds in the sector.
Curaleaf (OTCMKTS:CURLF) is the largest U.S. cannabis operator with a coast-to-coast footprint. It has had an impeccable record of expanding its reach and improving profit margins. With its sheer size, the business has access to a wide range of assets across the U.S. Despite its mouth-watering performance in recent years, the stock trades at just 3.8 times forward sales. Most of its peers are trading at significantly higher multiples.
The latest quarter saw the company delivering outstanding sales growth of 39% to $320 million. Revenues have grown by over 250% in the past five years.
CURLF stock has taken a downturn recently amidst concerns of potential sanctions against the company. Its second-largest shareholder, Andrey Blokh, is a U.S. citizen holding a Russian passport. These concerns, however, have been greatly overblown.
Cannabis Stocks to Buy: Cresco Labs (CRLBF)
Cresco Labs (OTCMKTS:CRLBF) is one of the leading cannabis multi-state operators with a massive footprint across the U.S. It operates a balanced approach where it generates a healthy proportion of its revenues from retail and wholesale channels. Consequently, its business generates industry-leading margins, growing every year.
Cresco pursues the biggest opportunities in the cannabis space. It’s been actively acquiring new businesses to expand its market share in some top states. The company operates 50 retail locations, 28 cultivation facilities and over 1,000 dispensaries..
The company has its roots in two of the biggest cannabis states in Illinois and Pennsylvania. In both these states, it has an incredible retail and wholesale presence. Moreover, Cresco is moving into key east-coast markets and transitioning from medical to recreational marijuana sales.
From a fundamental perspective, the business has been rock solid. Its revenues have shot up almost 74% on a year-over-year basis, while its EBITDA growth has soared over 1,000%. It ended the year with more than double the retail locations from last year and integrated five acquisitions. Cresco has a solid foundation with which it can push on after marijuana is green-lit on a state level.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.