Marijuana stocks might not be in favor right now. Much of this could be blamed on investor sentiment based on the lack of positive movement toward cannabis reforms in the United States. But that doesn’t make pot stocks bad investments. Some Multi-State National Operators (MSOs) have strong fundamentals with huge long-term prospects.
Investors who buy and hold these stocks could profit handsomely once the cannabis market booms again. But as with all growth stocks, patience is key. On average, analysts predict monstrous increases for most marijuana stocks. My eyes are on these three.
1. Green Thumb Industries
Even in a limited, Illinois-based legal market Green Thumb Industries‘ (GTBIF -0.11%) revenues have quadrupled since $216 million in 2019 to $894 million in 2021.
It has also been profitable for seven consecutive quarters in a highly competitive industry, thanks to its aggressive expansion strategies. Of operation of 39 stores in 2019 at about 80 dispensaries in 15 states today, it has come a long way.
What’s fascinating about this MSO is that it targets limited licensing markets rather than expanding anywhere. These state market regulators offer limited licenses to certain cannabis operators. The strategy has allowed Green Thumb to gain greater consumer traction in these states.
These factors may have helped the company post another stellar quarter with a 25% year-over-year revenue increase to $243 million. A net income under generally accepted accounting principles (GAAP) of $29 million also exceeded $10 million during the period of a year ago. It has opened 10 stores so far this year. The first quarter also marked its ninth consecutive quarter of positive cash flow from operations, which came in at $55 million. It also ended the quarter with $175 million in cash. Raising capital is always a challenge for cannabis businesses because marijuana is federally illegal. Thus, the cash will enable it to repay its debt and finance its future growth strategies.
Street analysts see 232% upside potential for Green Thumb shares over the next 12 months. For growth investors looking for a blue chip stock, this pot stock is a great option.
2. Planet Fund 13
The $283 million market cap company’s unique hypermarket strategy has put it in the limelight. It has huge cannabis dispensaries in key locations that provide customers with a special retail experience.
Planet 13 farms‘ (PLNH.F 2.34%) The popular Las Vegas store is the largest cannabis space in the world. Its huge dispensaries sell a wide range of branded products, including edibles, vapes and cannabis extracts. However, it’s still not a high-revenue company, mainly because it only operates in Nevada and California so far.
But Planet 13 is slowly expanding to other states. She plans to open another hypermarket in Chicago, where she has obtained a dispensary license. The company has also signed leases for of them Florida Dispensaries and plans to open a third. This unique superstore strategy could take the company to great heights when the cannabis market expands.
Even with two states, he manages to increase his income. In the first quarter, revenue showed year-over-year growth of 8% to $26 million. It also reported another quarter of operating profit. However, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) declined to $2.6 million in the first quarter from $5.1 million in the prior year quarter due to macroeconomic pressures in the first quarter. . Planet 13 is not a profitable company, but with its business expanding at this rate and its revenues growing, it could sooner rather than later see green in its results. Management said in the earnings call that the company is focused on maintaining its 8% to 12% market share in Nevada. Its upcoming Florida operations are also expected to drive growth in 2023.
3. Jushi Holdings
Although it is a small cap MSO, Jushi Holdings (JUSHF 7.38%) grows aggressively. It opened its 33rd national outlet in June, which is also its fourth dispensary in Nevada. The state is a popular market for tourists.
In the first quarter, Jushi’s quarterly revenue of $62 million was up 48.5% year over year. According to management, the increase in the company’s retail footprint from 17 to 29 stores during the quarter was responsible for this growth. Its EBITDA of $1.1 million, however, fell $3 million from the year-ago quarter. It ended the quarter with $76.2 million in cash and cash equivalents.
Street analysts are bullish on Jushi’s stock, predicting a rise of nearly 286% over the next 12 months. An acceleration of state legalization could boost Jushi’s growth figures, generating strong returns for investors this year.
The the industry is still nascentbut it’s expected to grow at a compound annual growth rate (CAGR) of 14% to a value of $70 billion by 2030.
There is a vast lag between the performance of cannabis company stocks and the underlying business. Overall negative market sentiment towards riskier stocks like cannabis also dragged down the company’s valuation. This is why aThe above three stocks are cheap now, trading at selling price ratios between 1 and 2. Higher revenue figures or any positive movement towards cannabis reforms in the near future could make them jump. Given that pot broths have promising potential, growth-oriented investors may be tempted to buy them at a favorable price now and hold them for the long term.