Written by Aditya Raghunath at The Motley Fool Canada
Unlike Canadian cannabis companies, marijuana producers south of the border enjoy consistent profits and strong balance sheets. Several cannabis companies in the U.S. are multi-state operators, and a few of these regions are multi-billion markets.
Further, there is a possibility for cannabis to be legalized at the federal level, rapidly widening the total addressable markets for U.S. marijuana players. Several of these stocks are listed on the CNSX, making them accessible to Canadian investors.
Here are three such U.S. cannabis stocks that are ready for a breakout.
Curaleaf stock
Valued at a market cap of $3.5 billion, Curaleaf Holdings (CNSX:CURA) earned US$1.5 billion in sales in 2022. In Q1, its revenue surged 14% year over year to US$336 million, while international sales grew 53% to US$12.5 million. The medical and recreational marijuana dispenser reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of US$71 million in Q1 and expects cash flows to range around US$55 million in 2023.
Curaleaf owns and operates 152 stores in 19 states, with 60 stores located in Florida, which is a limited-license market.
The cannabis giant also has a presence in Europe, a market that is forecast to touch US$14 billion by 2028, rising 53% annually. In order to lower its cost structure, Curaleaf shut down operations in a few facilities in California, Oregon, and Colorado.
But it also opened 26 new stores year to date, allowing Curaleaf to increase sales to US$2 billion in 2024. Analysts remain bullish on Curaleaf stock and expect it to gain 90% in the next 12 months.
Trulieve Cannabis stock
A vertically integrated marijuana producer, Trulieve Cannabis (CNSX:TRUL) is a major player in the medical marijuana market. It operates 125 medical cannabis dispensaries in Florida and enjoys a 50% market share in the sunshine state. Moreover, Trulieve also has dispensaries in nine other states, which include Nevada, California, and Arizona, with a total of 186 stores in the country.
It acquired Harvest Health & Recreation in October 2021, making Trulieve the largest U.S. cannabis company in terms of retail footprint.
Due to a challenging macro environment and rising competition, Trulieve’s sales in Q1 fell 9% to US$289 million. Comparatively, its adjusted EBITDA declined to US$78 million in the March quarter, compared to US$105 million in the year-ago period.
Valued at a market cap of US$1 billion, analysts expect Trulieve stock to more than triple in the next 12 months.
Green Thumb Industries stock
The final cannabis stock on my list is Green Thumb (CNSX:GTII), which reported sales of US$249 million in Q1, an increase of 2% year over year. While Green Thumb and its peers are currently wrestling with oversupply and pricing pressures, the company increased its sales from US$216 million in 2019 to US$1 billion in 2022.
Green Thumb operates in several limited-license markets allowing it to build a loyal customer base and generate stable earnings. For instance, it has now reported 10 consecutive quarters of positive GAAP (generally accepted accounting principles) net income.
Green Thumb operates 70 stores in 15 states, compared to 39 stores in eight states in 2019. While the company has used debt to fuel its growth, it ended the quarter with US$278 million in debt and US$185 million in cash. Its debt-to-equity multiple is quite low at 0.15 times.
The post U.S. Cannabis Stocks Are Ready for a Breakout appeared first on The Motley Fool Canada.
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Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Green Thumb Industries. The Motley Fool has a disclosure policy.
2023
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