Cresco Labs is a multi-state operator in the business of cultivating cannabis, manufacturing products derived from cannabis, and distributing these products to consumers. They have a focus on regulatory compliance and advanced agricultural practices. This cannabis stock peaked earlier this year – but should you buy Cresco stock?
Let’s take a closer look at the fundamentals and technicals to see if Cresco stock is a buy:
Cresco Labs Fundamentals
HQ: Chicago, IL, USA
Symbol: CRLBF (OTC), CL (CSE)
Company Focus: Strong
As a top quality cannabis producer, processor and retailer operating in ten US states, the company focuses on entering highly regulated markets with excessive demand potential and high barriers to entry. Cresco has elevated everyday cannabis through its THC-forward products available in flower, vape pens, and multiple forms of extracts.
Related: Should You Invest in AphriHelios?
Cresco has 18 production facilities, 44 retail licenses, 32 operational dispensaries, massive revenues and a steady stream of acquisition announcements. They have a consumer packaged goods mentality.
Cresco Company Size: Strong
Market Cap: US $2.95 billion
Enterprise Value: US $3.17 billion
# of employees: 2,300
Majority Subsidiaries: Bluma Wellness; Floramedex LLC; MedMar; PDI Medical; Hope Heal Health; SLO Cultivation; Diadem Mineraco
Cresco Management: Neutral
CEO & Director: Charlie Bachtell ($664,000 annual salary)
CFO: Dennis Olis
Executive Chairman: Thomas Manning
COO: David Ellis & Ty Gent (Co-COOs)
Cresco Company Branding: Strong
Cresco utilizes a multi-brand approach to product development. The brand “Cresco” features THC-focused products available in flower, vape pens, and multiple forms of extracts. “Mindy’s Artisanal Edibles” and “Mindy’s Kitchen” are brands created in collaboration with James Beard Award Winning Chef Mindy Segal and are the industry’s first true culinary-backed edible option.
Related: Is AXIM Biotech a Buy?
Both of Mindy’s lines are lauded for their unique flavor profiles. “Reserve” products are made from Cresco’s most premium and exclusive plants, and are the reward of years of selective breeding. “Remedi” products are designed for the medically-minded patient, with forms reminiscent of traditional pharmaceuticals. Other brands include Wonder Wellness, High Supply, and Floracal. This is great news but should you buy Cresco stock?
Current share price: US $13.03
52 week high/low: $3.24-17.49
Price to Sales: 5.85
Cresco has strong revenue but likes to acquire big names. This increases their debt some and explains some of their stock price hurdles. In December 2020, the company amended a previous loan to increase to $200 million.
Principal amounts of 411.7 millions at 12.7% interest rates. These mature in January 2023. As of December 2020, they had $136.3 million in cash and cash equivalents.
Risks of Buying Cresco Stock: Medium
The risks of investing in any cannabis company are currently high given the newness of the market. The risks of investing in this company are less so given their multi-state presence and strong focus.
Bottom Line: Should You Buy Cresco Stock?
As a differentiated grower, processor and retailer of premium cannabis with operations in ten states, Cresco focuses on entering markets with out-sized demand potential, significant supply constraints and high barriers to entry. Cresco labs is one of the largest major producers of cannabis in the United States.
Cresco’s growth has been amazing. They have over 5,000 SKUs in over 700 dispensaries in the USA. This alone is impressive. Their national footprint is also impressive with 18 production facilities and 44 retail licenses.
Along with that huge presence, their acquisition strategies have also been large. In 2019 it was Origin House for $823 million. In 2021 it was Bluma Wellness in Florida for $213 million. Finally in 2021 it was Cultivate Processing for $90 million in Massachusetts. These gave Cresco huge presences in some of the largest markets in the USA.
These large acquisitions have hurt their financials though with significant debt hitting their balance sheets. In 2020 they recorded revenue of $476 million, up 271% YoY. Their adjusted EBITDA was $116 million. Their total debt is at $185 million and they did finalize $200 million in loans in late 2020. But should you buy Cresco stock?
The debt and dilution are really the only things holding their stock price back currently. Their strong revenue, extremely well done brand names, and huge national footprint have them well placed to carryon. Watch for this stock price to raise in 2021. We give them a Strong rating.
About Cannin: Your Cannabis Stocks Resource
78% of Cannin’s fundamentals prove true within 30 days or less on 100+ recommendations over the past 2 years.
Cannin is your #1 trusted resource for cannabis stocks. Our global team of experts evaluates all emerging cannabis stock investing opportunities. We aggregate hundreds of hours of financial research and provide tips on the best cannabis stocks for 2021.
Use Cannin as your resource for:
Market analysts expect the marijuana and hemp industry will have an annual value exceeding $75 Billion in the next decade. Is it too late to invest in marijuana stocks? No! This is the perfect time to invest.
Are you looking to buy stock in hemp companies or marijuana companies for 2021? Interested in new penny hemp stock companies? Looking for the best Canadian cannabis stocks to invest in? Looking to leverage the power of algorithmic stock trading to beat the cannabis market? We can help.
Predict price movements of cannabis stocks several hours in advance with our proprietary algorithmic stock trading software.
- +30% Gains in 2020
- +49.8% Gains in 2019
- Backtested since 2012
We’re so confident you’ll love our algotrading cannabis stock signals, we’re willing to give you a one-month risk-free trial to see it for yourself.
Profit from the best cannabis stocks – we’ll show you how at cannin.com.