There is no denying that the cannabis sector has witnessed incredible growth in recent years. From activist movements pushing for legalization and strong backing from investors who want nothing more than a piece of this pie, it seems like the sky is the limit for the sector. Despite the beating the cannabis sector has taken in over the past several months, there are multiple cannabis stocks with strong buy ratings from analysts.
Most cannabis stocks actually performed relatively well, despite pandemic-led troubles which hampered progress on the legalization front in the U.S. Indeed, the lack of progress on U.S. federal cannabis reform has further exasperated concerns for investors. However, recent developments point to a brighter future ahead.
Demand for marijuana is at an all-time high, and global sales are expected to increase by 22% this year. A record number of voters now favor legalization, suggesting there’s a lot more potential in the marijuana sector than many anticipated. With that being said, let’s look at seven of the top cannabis stocks that boast strong analyst ratings from data gathered from Tipranks.
|GTBIF||Green Thumb Industries||$10.20|
|VFF||Village Farms International||$2.03|
Curaleaf (OTCMKTS:CURLF) is one of the largest U.S.-based cannabis stocks, providing investors access to a significant retail and wholesale footprint. The company currently operates 136 retail locations and 26 cultivation sites in the country.
Curaleaf has been one of the more consistent cannabis businesses in its niche, positioning itself for long-term growth by investing in new markets, winning licenses, and acquiring other operators. Moreover, the company’s profitability has been impressive, with its gross margins and EBITDA margins coming in at 51.9% and 25.5% in its most recent quarter.
Unlike its peers, Curaleaf is one of the top cannabis stocks in terms of international expansion. In particular, Curaleaf has made some noteworthy acquisitions in Europe. The company acquired a couple of European medical cannabis businesses in EMMAC and Pharma GmbH to establish its presence in the region. The European marijuana market is estimated to be worth $229 billion over the long term, and CURLF’s dual focus gives it the edge over its competition.
Jushi Holdings (JUSHF)
Jushi Holdings (OTCMKTS:JUSHF) is quickly evolving into one of the leading cannabis multi-state operators (MSO), yet it trades at just 1-time forward sales. The company has grown its sales by triple-digit percentages over the past couple of years, and is likely to wrap up 2022 with record sales.
Jushi ended the second quarter by adding key retail locations in its core markets in Virginia. Also, the company acquired Nevada-based NuLeaf to expand its presence in the state. This cannabis company is a direct beneficiary of the substantial growth expected from the Virginia market. Indeed, Virgina is expected to launch recreational cannabis in 2024 and has significantly relaxed medical cannabis regulations.
Additionally, the firm has multiple assets in key markets such as Ohio, Illinois, Massachusetts, Nevada, and Pennsylvania, where it plans to transition from medical to recreational cannabis shortly. Therefore, the hyper-growth business is far too cheap for investors to ignore.
Green Thumb Industries (GTBIF)
Green Thumb Industries (OTCMKTS:GTBIF) is one of the strongest operators in the cannabis sector, with an impeccable track record. Sales and profits continue to soar as the company expands its store count in the most lucrative markets in the U.S. Moreover, Green Thumb has done incredibly well in managing investor expectations and delivering on its goals.
Despite various headwinds, the firm reported strong numbers in its second quarter.Green Thumb grew sales by 14.6% year-over-year. Notably, this was the eighth consecutive quarter where the company reported positive GAAP earnings, an incredible feat compared with other players in the sector. The company boasts one of the strongest margin profiles in the sector, which continues to improve with every passing quarter. Moreover, its cash flow margin is also creeping up, and could grow by double-digits in a more conducive environment.
Cresco Labs (CRLBF)
Cresco Labs (OTCMKTS:CRLBF) is another leading MSO with a robust track record of growing its top and bottom lines. Moreover, its tremendous profitability numbers have enabled the company to expand its business at a healthy pace over the past few years.
Sales in the company’s most recent quarter were relatively unimpressive, considering pricing pressures in key markets such as Pennsylvania. Nevertheless, Cresco continues to push forward with its wholesale footprint. The company has increased its sales volume and market share in multiple states across the U.S. Moreover, it expects to receive roughly $300 million in proceeds from unloading some of its assets, resulting in higher profits.
Cresco’s acquisition of New Jersey-based operator Columbia Care has the market buzzing. The state recently launched adult-use cannabis, meaning this acquisition provides Cresco access to the Garden State. Cannabis sales in the New Jersey market are estimated to be $775 million this year and could reach $2 billion in the next five years.
Trulieve Cannabis (TCNNF)
Trulieve Cannabis (OTCMKTS:TCNNF) is a medical cannabis giant with a strong presence in the burgeoning Florida market. Moreover, last year, the company undertook a massive acquisition of Harvest Health to expand its footprint outside of Florida to the northeast and southwest of the U.S.
Notably, investors appear to have gotten spooked by the substantial increase in its debt load following the acquisition. That said, Trulieve’s encouraging second-quarter results have shown that those fears are overblown.
With the Harvest Health acquisition, Trulieve became the most “profitable public multi-state operator” in the U.S., with over 175 dispensaries across 11 states. Most investors are concerned about how Trulieve will be able to foot the bill. However, its massive 43% growth in sales in the second quarter has shown that it may have enough cash flow to cover the cost over the next few quarters. Moreover, with the potential legalization of adult-use marijuana in Florida, Trulieve could be looking at a massive windfall in sales over the next couple of years.
Village Farms International (VFF)
Of all the Canadian cannabis stocks out there, Village Farms International (NASDAQ:VFF) is arguably the best option for investors looking to play this space. The Canadian cannabis market has shown signs of strong growth of late, with leading licensed producers seeing incredible sales growth in recreational cannabis. According to research firm Hifyre, recreational cannabis sales in Canada have grown by 21% this year through August. Moreover, VFF has successfully matched its supply with market demand, unlike its peers.
VFF reported robust cannabis sales in the second quarter, where its top line improved 37% sequentially, generating record branded retail revenues at CA$26.7 million. Also, the company has invested in a European cannabis upstart to foray into the region. That said, the bigger positive is that the Canadian cannabis market is finally showing stability for producers, and VFF remains the best way to play the sector.
Verano Holdings (VRNOF)
Verano Holdings (OTCMKTS:VRNOF) is another top vertically-integrated multi-state marijuana operator in the U.S. The company went public last year, but has already become a leading MSO with 135 operating retail stores. Notably, Verano has a strong footprint in Florida, followed by Pennsylvania and Illinois.
The firm has reported robust second-quarter sales of $224 million, up 12% from the prior-year period, with gross profits coming in at 44% of sales. Additionally, the company has managed to reduce its net loss to $10 million. That’s a substantial decline from a $30 million net loss in the first quarter of last year.
Verano’s management team has laid out its plans for long-term profitability. The goal is to focus on gaining efficiencies through automation and innovation. This will ensure better genetics for profitable cultivation. Additionally, with the company closing out its deal to acquire Goodness Growth, Verano now has a stake in the profitable New York market, which bodes well for long-term investors.
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