Curaleaf: A Strong Buy Amid Recent Legalization?

Plenty of cannabis stocks hog the spotlight every time news related to the market comes out – take “cannabis-darling” Aurora Cannabis (ACB), for instance. When five states legalized marijuana last week, ACB stock zoomed up, from $4.43 on November 4 to $11.21 on November 9 before crashing to $6.69 on November 12. However, while Aurora turns the spotlight on itself, there is one particular cannabis stock that has been quietly going about its business – becoming the world’s largest cannabis company by revenue: Curaleaf Holdings (OTC:CURLF) – but is Curaleaf stock a strong buy amid recent legalization?

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Curaleaf’s Impressive Revenues

Curaleaf has kept its razor-sharp focus on the bottom and top lines, and the results are there for everyone to see. The fourth quarter of 2019 saw the company clock revenues of $75 million. The first quarter of 2020 saw it move up to $96.5 million (up 28.66%) and the second quarter of 2020 saw it rise to $117.5 million (up 21.76%). If this isn’t the perfect growth curve, I don’t know what is.

Curaleaf’s revenues for the second quarter of 2020 were up by 142% compared to the same period in 2019. Its adjusted EBITDA kept pace with revenues, multiplying by six times to $28 million. The company generated $23.4 million in free cash flow in its latest results.

Sure, these revenues are quite impressive and they should certainly grow with these newly legal states but is Curaleaf stock a strong buy amid recent legalization? Visit our Curaleaf Investor Dashboard to get the latest fundamentals and technicals, curated by our expert analysts.

Continued Expansion and Growth

Curaleaf has been on an acquisition spree in 2020. In July, the company announced the acquisition of Grassroots for $700 million that propelled it to the world’s largest cannabis company by revenue. On November 5, it acquired Alternative Therapies Group’s licensed cultivation and processing operations in Amesbury, Massachusetts

Joseph Lusardi, Chief Executive Officer of Curaleaf, recently stated, “With the acquisition of ATG’s grow and processing operations, we’ll be adding 53,600 square feet of capacity to our existing 104,000 square feet capacity in Massachusetts . The Amesbury facility is fully built out, operational, and will be immediately accretive to our production capabilities in Massachusetts , which, according to Cannabis Benchmarks, currently commands the second highest wholesale flower prices in the nation.”

The company will raise $31.5 million via asset sales that will boost its liquidity position. On November 6, Curaleaf announced that it had completed the process to sell its interests in HMS cultivation and processor for $27.5 million to TerrAscend Corp and that it closed the sale of Curaleaf Maryland, Inc., which holds a processing license in Cumberland, MD for $4 million.

November has been a busy month for Curaleaf. Apart from the acquisition and sale, the company also expanded its award-winning line of Select Oil brand products to Pennsylvania — the fifth most populated state in the US. Select is one of the top cannabis oil brands in the U.S. and was acquired by Curaleaf in February 2020. It is available in over 1,000 dispensaries in 16 states right now and will be launched in New Jersey and Utah in the first quarter of 2021.

Right now, Curaleaf is the largest US cannabis operator, according to market cap, and it operates 95 dispensaries in 23 states with 23 cultivation sites and more than 30 processing sites.

The Road Ahead for Curaleaf

New Jersey may well turn out to be a prime market for Curaleaf. It will do one of two things: Either consumers from neighboring states of Connecticut and New York will flock to New Jersey to buy Curaleaf products for recreational use or both states might hasten legalization of pot for recreational use.

The stock has returned over 66% year-to-date and it currently trades at $10.49. Analysts covering the stock have an average target of $12.19, an upside of 16.2% from current prices. The upper end of the target is $18. As more states in the US legalize recreational pot use, Curaleaf is one of the best companies that will benefit amid recent legalization.

Curaleaf: A Strong Buy Amid Recent Legalization?

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Curaleaf: A Strong Buy Amid Recent Legalization?