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Top Marijuana Stock Trulieve Cannabis Continues to Outperform

Trulieve Cannabis Stock

Trulieve Cannabis (OTC: TCNNF) is a vertically integrated producer of cannabis products. The company cultivates and produces its products in-house and distributes cannabis products to its branded stores, as well as directly to patients via home delivery.

Trulieve Cannabis Fundamental Analysis

Focus: Strong 

Trulieve Cannabis Corp is a growth-oriented, licensed, vertically-integrated, seed-to-sale cannabis company headquartered in, and focused on, Florida, the third most populous state in the USA. It is the leading medical cannabis company there, with a significant market share of the state and 61stores. They also have dispensaries in CA, MA, CT, and recently acquired in PA.

Trulieve grows all its products in-house and distributes them to Trulieve-branded dispensaries in Florida, as well as directly to patients via home delivery. It makes approximately 500 SKUs (products), including smokable flowers, flower pods for vaporizing, concentrates, topicals, capsules, tinctures, and vape cartridges.

Size: Strong

Market Cap: $2.47 bil
Enterprise Value: $2.56 bil
Number of Employees: 2,300

Markets: Neutral

Primary: market leader in Florida

Secondary: MA, CT, PA, and CA in the near future, Canada

Subsidiaries, Interests:
The Healing Corner, Inc.; Trulieve, Inc.; Leef Industries, LLC; Life Essence, Inc.

Valuation: Neutral

Current share price: $21.70
Price to Sales: 6.77
52 week low/high: $5.74-$26.50
EV/Revenue: 6.97
Price/Book: 7.75

Financing: Strong

They currently have $150 million cash with debts of around $243 million. Trulieve plans for aggressive growth from acquisitions and expansions into Canada and other markets in the USA. They should have the cash to do so.

Risks: Strong

The risks of investing in this company may be somewhat lower than many cannabis companies in that Trulieve has substantial revenue and income, and is a leader in its main market (51% market share by their own estimates).

However, given the rapid changes affecting the economy generally, and the cannabis industry, in particular, no company can guarantee to maintain a competitive advantage in the market.

Financials: Strong

Revenue (TTM): $367 mil
Shares Outstanding (diluted): 38.6 million
Return on Equity: 51.4 %

Management: Neutral

CEO: Kimberly Rivers
CFO: Alex D’Amico
CPO: Kyle Landrum
CIO: Jason Pernell

Branding: Strong

Trulieve’s CBD products are designed to treat pain, seizures, muscle spasms, nausea, loss of appetite, and symptoms associated with conditions such as cancer. Its products have low THC and are available for patients who need non-euphoric care.

It has over 500 Trulieve-branded products, including smokable flower, flower pods for vaporizing, concentrates, topicals, capsules, tinctures, and vape cartridges. Its marketing consists of education and outreach to physicians, patients, and potential patients.

Trulieve’s educational materials help physicians understand the science behind cannabis, their production standards, and that its products are created to provide relief.

Trulieve Technical Analysis

Should I buy Trulieve Cannabis Stock?

Follow Stephen Goldman as he evaluates Trulieve Cannabis Corp (TCNNF) using the RSI, Coppock Curve, and moving averages of 50 and 200 periods to find golden crosses, alignment across indicators, and take our profit.

Remember sound cannabis stock trading strategies include both Fundamental Analysis and Technical Analysis.

Fundamental Analysis Continued

52 week Range -

Current production: Trulieve currently has 1.7 million sf of cultivation space on four sites, using both indoor and greenhouse facilities. It can now grow 30,000 kg of cannabis per year and is increasing its greenhouse capacity. The company grows 45 cannabis flower strains and expects to grow revenue in Florida, as that state recently passed legislation allowing the sale of smokable cannabis flower.

Trulieve produces 100% of the products sold in its Trulieve stores. They extract 50,000 grams of active THC or CBD per week. Edibles are the new booming business approved in Florida and they are manufacturing these products at a very high rate.

Direct sales: Patients can order products for delivery on-line or by calling the Trulieve call-center, which estimates 50% of their orders are for delivery or pick-up. They offer next day delivery in most of Florida.

Store networks: It operates 61 dispensaries in Florida (Florida allows 25 per licensee, plus five once a company reaches 100,000 active patients). Trulieve believes they will have 68 dispensaries by the end of the year. Trulieve bought Life Essence, a seed-to-sale cannabis company developing multiple locations in Massachusetts. Life Essence is applying for licenses to build and operate three medical dispensaries, three recreational stores, and a 126,000 sf cultivation facility.

Bottom Line: Is Trulieve Cannabis Stock a Buy?

Recommendation: Strong

Trulieve has a very strong position in Florida, the third-largest US medical cannabis market. They have 61 dispensaries, produce >30,000 kgs per year, and based on Q2 2020, are currently on a revenue pace of more than $475 million this year.

They plan to also expand their growing capacity in Florida and target 68 dispensaries by year’s end.  They’ve bought businesses in MA, PA, and CA, and the one in Mass has enough grow space to boost their output to 45,000 kgs per year in the coming few years.

This looks like a strong plan to increase revenue growth for the company. The question is, is this revenue already priced into their stock? Or will the stock price grow as revenue grows?

By our calculations, the company has a price to sales ratio of ~6 —about the average in the tobacco industry. This is a great sign for them and shows any revenue growth should drive the stock price higher.

They maintain over 50% market share in Florida, have positive revenue growth year over year, and have 500+ SKU’s. All this means fantastic growth is ahead. When Cannin last evaluated Trulieve in February 2020 the stock price was at $10.46 and we rated them as strong. Now the stock is double that price and we continue to rate them as one of the strongest cannabis companies we monitor.

For investors who don’t mind waiting a year for a solid return, we think Trulieve at its current price presents a good opportunity for long term gain.

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