Cannabis companies have two options to expand their business across territories. They can either go wide or they can go deep. Trulieve Cannabis (OTC: TCNNF) has chosen to go deep. Trulieve is Florida’s largest cannabis company with 79 locations in the state alone. The company continues to show plenty of promise but is Trulieve a good stock to buy?
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Steady Growth for Trulieve Cannabis Stock
Ever since its inception, Trulieve has grown steadily and now holds a 52% share in Florida’s cannabis market. While 79% of its customers are repeat buyers, the company caters to 1,500 new medical cannabis patients on a monthly basis. Trulieve Cannabis products help to alleviate seizures, muscle spasms, nausea, loss of appetite, pain as well as other such symptoms which may be associated with serious medical conditions such as cancer. In fact, many of Trulieve’s products are low THC/CBD ones, making them suitable for patients requiring non-euphoric care.
If you had taken Cannin.com’s advice to buy TCNNF last year, you would have doubled your investment
In 2020, the company’s YoY sales grew 106% to $521.5 million, while net income was up 19% at $63 million. Cash flow came in at $99.6 million for 2020. Adjusted EBITDA of $251 million for 2020, almost doubled year over year.
The last year was also Trulieve’s third straight year of profitability, having achieved record fourth-quarter revenues of $168.4 million – indicating a 24% sequential increase.
What’s Next for Trulieve Investors?
Focussing on one state is a great way to streamline operations and cut costs. Trulieve has put in deep roots in Florida but if it wants to scale up, it has to expand to other states.
The company, which already has a stronghold in the Sunshine State, is looking to strengthen its footing in other locations too. On April 5, it announced that it acquired a dispensary license from Anna Holdings, and will be operating under Keystone Shops.
This will expand Trulieve’s footprint in Pennsylvania and take the total count of dispensaries to 86. Pennsylvania is the fifth most populated and limited-license state in the US.
CEO, Kim Rivers recently said, “Trulieve continues to bolster our national expansion efforts with acquisitions that both complement our current portfolio and strengthen our long-term strategy. The Keystone Shops are located in a densely populated area of Pennsylvania and with their staff’s knowledgeable and customer-centric approach to patients, these dispensaries are valuable additions to our Pennsylvania portfolio.”
She continued to say, “Based on Trulieve’s markets, current regulations, and foreseeable store growth, the Company estimates 2021 revenues in the range of $815 million to $850 million, and $355 million to $375 million in adjusted EBITDA.”
Bottom Line: Is Trulieve a Good Stock to Buy?
Trulieve has expanded its national footprint through acquisitions of Solevo Wellness and PurePenn. The company is serious about expanding. On April 7, Trulieve announced that it raised $198.1 million by selling shares at $39.63 before deducting the underwriting discounts and commissions, and other offering expenses. The company said it will use the proceeds to fund its business development.
Trulieve expects all of these acquisitions and expansion strategies to start paying off as early as 2021. In its guidance for 2021, it accounted for a full year of operations from Pennsylvania, continued growth in Florida as well as its Massachusetts, Connecticut, and California locations.
Adult-use cannabis has already been legalized in over 16 states in the United States of America, including Washington D.C, and with full legalization in Canada, recreational marijuana is clearly here to stay.
With Trulieve stock closing at $41 on April 12th, analysts have a 12-month average target price of $69.04 for Trulieve Cannabis, an upside of over 60%. Cannin.com recommends you invest if you haven’t yet done so as Trulieve is a good stock to buy.
Is Trulieve a Good Stock to Buy?
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