Robert Burleson has just released a report revealing a more bullish outlook for the cannabis industry. As we can see here this five-star analyst is ranked #272 out of over 5,200 analysts for his savvy stock picking skills:” data-reactid=”11″>Canaccord Genuity has some good news for cannabis investors. The firm’s Robert Burleson has just released a report revealing a more bullish outlook for the cannabis industry. As we can see here this five-star analyst is ranked #272 out of over 5,200 analysts for his savvy stock picking skills:
“We are adjusting our US cannabis retail sales estimates to reflect recent changes at the state level. Our long-term growth outlook is increased to reflect a 20% CAGR from 2019 to 2022, up from 19% previously” Burleson stated. That would generate total US sales of a whopping $21,994 million by the end of 2022, up from a predicted $12,795 million at year-end 2019.
While Burleson reduces his New York assumptions on a push-out for the timing of the state’s recreational program, he increases expectations for Illinois following the recent passage of a recreational cannabis law. Other notable changes include increases for Massachusetts (recent positive inflection) and Nevada (continuing strong trends).
For example, for Massachusetts, the analyst is now predicting a 27% CAGR (compound annual growth rate) from 2019 to the end of 2022- although Illinois looks set to take the title of fastest growing region with a jaw-dropping 66% CAGR.
So with this strong growth outlook in mind, which three cannabis stocks does Burleson recommend for investors looking to enter this potentially very lucrative space? As you will see below, all three stocks boast only buy ratings from the Street- although bear in mind Burleson has a ‘speculative buy’ rating on these stocks on account of the higher degree of risk involved in cannabis investments.
KSHB)” data-reactid=”24″>KushCo Holdings Inc (KSHB)
Founded back in 2010, KushCo specializes in vaporizer products, as well as cannabis packaging, supplies, and accessories. It also owns Kush Energy, a provider of ultra-pure hydrocarbon gases and solvents to the cannabis sector.
What stands out here is that five analysts have published 5 recent back-to-back buy ratings on KSHB. That gives the stock its ‘Strong Buy’ analyst consensus. Most notably their average price target of $7.90 indicates impressive upside potential of 60%. Burleson, for example, has a $7.50 price target on the stock vs its current price of just $4.95.
Indeed, the stock rose recently after Burleson reiterated his speculative buy rating on the stock. The analyst stuck to his upbeat analysis after meeting company management. According to the analyst, KushCo revealed that it will pass on the latest tariffs on goods from China by raising prices for its popular vape hardware.
“Vape hardware demand continues unabated, evidenced by recent data from BDS Analytics showing vape’s increasing share of retail sales in [recreational use] markets, somewhat to the detriment of flower [or, dry cannabis] sales” Burleson told investors. “As such, we believe KSHB’s revenue mix from vape hardware is likely to remain elevated.”
Scott Fortune has just initiated coverage of the stock with a buy rating and $8 price target. He sees KSHB as the leading cannabis ancillary products and services play in the rapidly growing legal cannabis industry. The best part is that the analyst sees shares surging thanks to multiple positive catalysts, writing:” data-reactid=”29″>Meanwhile Roth Capital’s Scott Fortune has just initiated coverage of the stock with a buy rating and $8 price target. He sees KSHB as the leading cannabis ancillary products and services play in the rapidly growing legal cannabis industry. The best part is that the analyst sees shares surging thanks to multiple positive catalysts, writing:
“We expect a number of catalysts including increased regulations with new packaging, securing large cannabis operators in key legal (CA) and new states, deepening customer relationships, cross-selling opportunity as the one-stop-shop, cannabis-derivative growth, expansion into Canada, potential acquisition take out, and an upcoming uplisting.”
HARV)” data-reactid=”43″>Harvest Health & Recreation Inc (HARV)
Calling itself the ‘House of Cannabis’, Arizona-based Harvest Health already holds the largest market share in Arizona, and boasts a strong presence in 10 other US states. According to the company, it is now on track to deliver strong pro forma revenue of $900 million to $1 billion by 2020.
Encouragingly for investors, analysts also believe Harvest is on track for dramatic outperformance. In total, four analysts have published recent ratings on the stock- and all are bullish. Their average price target of C$19.45 suggests shares are set to surge by over 140%. Burleson is relatively in-line with this estimate with a C$19 price target.
Robert Fagan. He recently initiated coverage of HARV with a buy rating and C$18.50 price target. “Historically, the company’s core operations were focused in Arizona, however recently HARV has grown at an impressive speed through a series of license wins and acquisitions, resulting in one of the industry’s largest operating platforms featuring (on a pro forma basis) 28 open stores today, and ~136 estimated total dispensary licenses across 16 states,” Fagan told investors.” data-reactid=”46″>Adding his voice to the crowd is GMP FirstEnergy’s Robert Fagan. He recently initiated coverage of HARV with a buy rating and C$18.50 price target. “Historically, the company’s core operations were focused in Arizona, however recently HARV has grown at an impressive speed through a series of license wins and acquisitions, resulting in one of the industry’s largest operating platforms featuring (on a pro forma basis) 28 open stores today, and ~136 estimated total dispensary licenses across 16 states,” Fagan told investors.
The analyst continued: “HARV has surfaced as the industry’s most aggressive acquirer, deploying an estimated ~$1.3b on M&A recently, ~60% more than the average of all MSO [multi-state operator] peers.” For example, the company recently snapped up San Felasco Nurseries, a holder of a medical marijuana dispensary license in Florida. Plus its $850 million acquisition of cannabis facility operator Verano is set to close in late 2019.
And that’s just the beginning. Looking ahead, Fagan expects HARV to continue its rapid consolidation. Indeed the company currently holds a cash pile of ~$500m ready to splurge on further M&A transactions. According to Fagan this should drive shares even higher.
IAN)” data-reactid=”57″>iAnthus Capital Holdings (IAN)
Last but not least comes this high-quality multi-state operator. The company has many attributes in its favor. These include its transformational $1.6 billion acquisition of MPX, a financially savvy management team, and its discounted valuation vs other MSOs.
Russell Stanley notes, IAN is also one of only ten licensed medical cannabis Registered Organizations in the New York State. And its Brooklyn location, which opened in late 2018, is one of only three stores serving a city of 2.6 million.” data-reactid=”59″>In addition, as top-rated Beacon analyst Russell Stanley notes, IAN is also one of only ten licensed medical cannabis Registered Organizations in the New York State. And its Brooklyn location, which opened in late 2018, is one of only three stores serving a city of 2.6 million.
“This 2,000 SFT location opened in late December 2018, making it the first to open in Brooklyn” cheers Stanley. “It is just steps from the Barclay’s Center, home to the NBA’s Brooklyn Net [and] the NHL’s New York Islanders… This site also hosts the Atlantic Avenue-Barclays Center subway station, which is shared by four subway lines. We believe this bodes very well for foot traffic in the area, particularly once adult- use is legalized,” says Stanley.
“We continue to view adult-use legalization as an inevitability, although the timing and the details remain uncertain. Most importantly, even as a stand-alone medical market, NY still has a lot of growth potential,” the analyst added.
Only three analysts have rated the stock in recent months, but all three analysts see the stock as a ‘buy.’ Their average price target works out at C$12.67, with Burleson’s price target slightly lower at C$11. Not that that’s such a conservative estimate- from current levels the Canaccord Genuity analyst still sees 161% upside potential ahead.
Find the best-rated stocks from the market’s top analysts here” data-reactid=”71″>Find the best-rated stocks from the market’s top analysts here
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