Green Thumb Industries: Best Marijuana Stock for 2020
Add this marijuana stock to your portfolio this year and watch it grow.
2019 was the most unfortunate year for marijuana stocks. Cannabis companies like Canopy Growth Corp, Tilray, and Aurora Cannabis, are among many marijuana stocks which are now down 45-95% in value over the past twelve months. This has driven many investors away from the sector but the potential for profit still remains.
Why is it important to follow marijuana stock opportunities?
Conversely, 2019 was the biggest year for global marijuana sales yet. In fact, 2019 global legal marijuana sales grew by 46% to $14.7 billion, a substantial increase from the 16% growth of 2018, and the industry’s highest annual rate of growth to-date. As this industry continues to grow and mature, share prices in many cannabis companies will increase substantially.
Our analysts believe that marijuana stocks like Green Thumb Industries will continue to deliver significant revenue growth in 2020 thanks to the new adult-use cannabis market in Illinois. The company aims to reproduce its successful model in several states across the nation and should have the ability to execute this ambitious vision.
Although, most marijuana businesses have been deemed as essential during the current COVID crisis, be aware of high levels of volatility for most marijuana stocks in the short term. In fact, the COVID crisis will likely remain as an existential threat to the cannabis industry and will be an “extinction-level event” for many cannabis companies, according to MJ Biz Daily.
Green Thumb Industries: Best Marijuana Stock for 2020
Green Thumb Industries, Inc. (GTII) is an interesting Multi-state Cannabis Operator (MSO) that engages in the manufacture and distribution of branded cannabis products. We love the fact that it focuses both on wholesale and retail cannabis segments.
Why do we Recommend Green Thumb Industries as one of the best cannabis stocks for 2020?
There are multiple reasons to like the long-term growth potential of GTI marijuana stock. The company is vertically integrated, with a strong focus on building brands, and creating a unique and attractive retail experience that builds loyal visitors. This supports their goal to preserve strong margins in an industry that will likely experience price compression and falling margins as the industry matures.
Current Operations & Production
They currently operate 25 dispensaries and plan to have 40-50 operating in a few years, roughly doubling their number. They target roughly $3.6 mil in revenue from each store. This suggests they could generate close to $180 million in revenue from their retail side in a few years.
Currently, they grow at least 25,000 kgs year, which at $6 gram generates about $125 million. When expansions are done, they expect to have a future capacity of 50,000-60,000 kgs a year. Given their growth strategy, we think that their revenue target of $400-430 million is a good estimate of where their future revenue should be in a few years.
They also have a strong cash position (over $65 million) and appear to have excellent access to capital. This suggests they should have the money they need to invest to make their growth plans come true – even amid the COVID crisis. This is something that many other cannabis companies will struggle with. In fact, the COVID crisis remains as an “extinction-level event” for many cannabis companies.
Bottom Line: Is Green Thumb Industries a Good Marijuana Stock Investment?
GTI stock price was down in 2019, just like all cannabis stocks, but is up over 30% in the last month. The price to sales is down to 13 (from 20) but is still too high for our liking. But does this mean it’s not a buy? Or is it too early or too late to buy this marijuana stock?
Given their current and future production of 50,000-60,000 kgs a year we believe that their annual revenue target of $400+ million is a reasonable estimate of where their future revenue could be in a few years.
In other words, it looks to us like a solid long-term investment. Green Thumb Industries is not a marijuana stock that will win a race for the highest gains in the next year or two. Instead, one that will produce an even-handed long term increase for long-term investors.
Green Thumb Industries: Best Marijuana Stock 2020
About Cannin: Your Marijuana Investment Experts
Market analysts expect the marijuana and hemp industry will have an annual value exceeding $75 Billion in the next decade. The time to invest in hemp and marijuana stocks is now. Are you looking to buy stock in hemp companies or marijuana companies? Interested in emerging penny pot stock companies? Looking for the best Canadian marijuana company to invest in?
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