As the societal tides turn, the once-stigmatized cannabis sphere has effectively emerged as a promising investment frontier. Amid the crescendo of acceptance from consumers and regulators alike, the sector is ripe with opportunities for savvy investors seeking high-potential cannabis stocks. That said, the list of top cannabis stocks to buy covered in the article could infuse your portfolio with robust long-term growth prospects.
Granted, it’s been a bumpy road for the cannabis sphere in the past year or so, with it marred by overproduction, capital constraints, and the macroeconomic slowdown. Nevertheless, the sector’s long-term potential remains firmly in place. The dynamic interplay of federal legalization debates and piecemeal state-level changes only adds to the sector’s attractiveness. The momentum is palpable, with 37 states greenlighting medicinal use and 21 sanctioning recreational enjoyment.
According to MarketsandMarkets, the global cannabis market valued at a whopping $22.7 billion last year is forecasted to balloon by 24.3% growth from 2022 to 2026, underscoring the sector’s high return potential. As the sector lies at the heart of a global legalization scramble, the time for the best cannabis stocks for long-term investment is now.
|IIPR||Innovative Industrial Properties||$71.22|
|GTBIF||Green Thumb Industries||$7.70|
Top Cannabis Stocks to Buy: Curaleaf (CURLF)
Curaleaf (OTCMKTS:CURLF) is one of the most dominant players in the cannabis niche, establishing its position as a leading multi-state operator (MSO). The firm has been remarkably resilient over the years, generating consistent growth across both lines.
In its most recent quarter, it reported a 7.5% year-on-year revenue increase and a 14% uptick in continuing operations. This positive trajectory follows its strategic move to exit underperforming businesses in California, Colorado, and Oregon. However, this step underpins a prudent focus on fiscal health, with Curaleaf setting a 2023 free cash flow target of $125 million. As the firm eyes international expansion, particularly in adult-use sales in Germany, and a foray into the $5 billion New York cannabis market, its long-term prospect should have its investors salivating. On top of that, it closed out the first quarter with a hefty cash balance of $116 million.
Cronos Group (CRON)
Cronos Group (NASDAQ:CRON) is a global cannabinoid innovator that saw its stock price tank over 40% last year. Consequently, it stands at an attractive price point, with Tipranks analysts forecasting a 41% upside from current levels.
Though its top and bottom-line results have been far from inspiring, its effective liquidity management having resulted in its cash and short-term investments growing to $836 million as of its latest quarter. The firm reported reduced EBITDA losses in the first quarter due to operational efficiencies and aims to deliver positive cash flows by 2024.
Moreover, it flaunts a well-rounded portfolio. From recreational cannabis in Canada to wellness products in Israel, the company seems to its bases covered. Additionally, its entry into the U.S. market with hemp-derived consumer products has been particularly noteworthy.
Innovative Industrial Properties (IIPR)
Innovative Industrial Properties (NYSE:IIPR) operates uniquely as a landlord for state-licensed cannabis growers. The real estate investment trust holds an impressive portfolio of 110 properties encompassing around 8.7 million rentable square feet.
From a financial perspective, IIPR’s allure lies in its attractive dividend yield of more than 10.1%, modest price to funds-from-operation (FFO) valuation of 8.5, and strategic exposure to the legalized cannabis trend. Additionally, IIPR boasts a robust 5-year growth rate of 55% and consistent dividend growth over the past five years.
Moreover, in the first quarter, the company effectively surpassed expectations with an adjusted FFO per share of $2.25, significantly higher than the analyst estimate of $1.91. The total revenue of $76.1 million topped the consensus of $70.7 million and reflected a significant rise from $70.5 million in the fourth quarter of 2022 and $64.5 million in the same quarter last year.
Trulieve Cannabis (TCNNF)
Trulieve Cannabis (OTCMKTS:TCNNF) stands out as a titan in the U.S. cannabis landscape, boasting over 7,600 employees and a massive network of 181 dispensaries and 21 cultivation facilities sprawled across 11 states. Unsurprisingly, the firm has earned its stripes as a top-notch medical marijuana operator, becoming one of the largest cannabis retailers in the U.S. Set against the backdrop of a rapidly expanding medical marijuana market, projected to grow from $26.9 billion in 2021 to a staggering $248.42 billion by 2030, Trulieve’s position looks incredibly promising.
Trulieve has proven to be one of the more resilient businesses in its niche. Revenue growth on a year-over-year basis has grown over 14%, surpassing the sector median by over 91%. Despite a minor dip in the first quarter revenue and an anticipated sequential decrease in the following quarter, the company’s ambitious targets provide confidence. With an operating cash flow projection of $100 million and a pledge to generate free cash flow throughout the year, Trulieve is primed to navigate the ebb and flow of this dynamic industry.
Cresco Labs (CRLBF)
Cresco Labs (OTCMKTS:CRLBF) is another top vertically integrated cannabis business, operating in 10 U.S. states, including populous ones such as Illinois, Massachusetts, and Pennsylvania. It specializes in branded products, wholesale distribution, and running state-licensed dispensaries. Over the years, it operated a remarkably consistent business, with revenue growth above 180% in the past five years. However, its results have slowed down of late, but its profitability metrics remain relatively robust at this time.
An exciting development on the horizon could potentially boost Cresco’s share price – the pending acquisition of Columbia Care. The management anticipates the transaction to close by June 30. This merger could propel Cresco Labs to become the leading vertically integrated in the U.S., making it a compelling consideration in the cannabis stock domain.
Green Thumb Industries (GTBIF)
Green Thumb Industries (OTCMKTS:GTBIF) is a powerhouse in the cannabis sphere, reinforcing its foothold as a top-tier U.S. operator. Notably, GTBIF remains a beacon of profitability among its peers, being the only large MSO still churning out positive GAAP profits. Moreover, its broad footprint places it in a select group of expansive MSOs, positioning the company as a formidable competitor in its niche. Its EBITDA, gross profit and levered cash flow margin growth stand at 29%, 49%, and 9%, respectively.
Committed to capitalizing on the industry’s rapid evolution, Green Thumb has set its sights on proactive expansion. The company has earmarked a substantial $165 million for this year alone, dedicated to developing new facilities. These facilities will likely unlock fresh sales opportunities as they come online, ultimately bolstering Green Thumb’s market share. Moreover, GTBIF stock trades at just 1,7 times the forward sales estimate, roughly 62% lower than its sector median.
Massachusetts-based MSO Marimed (OTCMKTS:MRMD) is another fascinating cannabis play. It’s among a select few companies operating in the cannabis sphere with relatively strong financials. With its strong shape, it secured a substantial $35 million loan earlier this year.
Looking ahead, MariMed eyes significant expansion this year, with its growth plan involving an anticipated increase in spending that will temporarily surpass revenue growth. This spike in expenditure arises from hiring 200 more full-time personnel, establishing a new outlet in Tiffin, Ohio, and expanding manufacturing capabilities in Massachusetts and Maryland.
Furthermore, they aim to kick-start new wholesale ventures in Illinois and Missouri. These concerted efforts are expected to fuel and significantly boost future revenue growth. In a broader context, MariMed’s operations spanning multiple U.S. states position it for potential long-term growth if U.S. federal cannabis reform materializes. Additionally, due to its smaller size and low valuation, MariMed could present an attractive acquisition target for larger marijuana businesses.
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.