The Marijuana Stock for the Big 2020 Rebound
Huge potential gains for this exciting cannabis stock
2019 was the best year yet for marijuana sales. In fact, 2019 global legal marijuana sales grew by 46% to $14.7 billion, a substantial increase from the meager 16% growth of 2018, and the industry’s highest annual rate of growth to-date. Growth in the adult-use marijuana markets of Canada, California, and Massachusetts were the largest contributors to global marijuana sales growth in 2019. Expanding medical marijuana markets in Florida and Oklahoma also contributed to this growth.
Conversely, 2019 was the worst year for marijuana stocks. Cannabis industry companies like Liberty Health Sciences, Tilray, and Aurora Cannabis, are among many marijuana stocks which are now down 50-90% in value over the past twelve months. The same goes for many cannabis ETFs which represent the overall condition of the entire sector. However, our analysts are recommending a handful of marijuana stocks for the big 2020 rebound.
It’s worth noting that our Smart Stock Algorithm allowed our members to profit 49.8% for every dollar they invested in marijuana stocks with our advanced signals – during the worst year in marijuana stock investing history.
However, the long term outlook for many marijuana stocks and hemp stocks remains just as bright as their LED grow lights. Specifically, long-term profitability for marijuana stocks like Green Thumb Industries remains as just promising as ever. Our analysts think that this is The Marijuana Stock for the Big 2020 Rebound.
Cannabis Stock to Watch: Green Thumb Industries (GTII)
Green Thumb Industries, Inc. (GTII) is an exciting Multi-state Operator (MSO) that engages in the manufacture and distribution of branded cannabis products. It operates through the Wholesale and Retail segments. The Wholesale segment includes cultivation, production, and sale of cannabis via retail stores. The Retail segment consists of trading cannabis to patients and consumers.
Why is this The Marijuana Stock for the Big 2020 Rebound?
GTI is a multi-state US seed-to-sale cannabis grower, producer, and retailer. It has a wholesale business (its Consumer Package Division, selling its brands to third party dispensaries) and a retail business (selling its own and third-party brands through its own dispensaries). It operates or is building 13 manufacturing facilities—in Illinois, Pennsylvania, Maryland, Massachusetts, and Nevada.
It owns and operates 25 retail dispensaries under its own RISE, Essence, and GTI brands. They are licensed for, and currently plan to own and operate, 88 dispensaries across at least 12 states, each producing on average $3.6 mil in revenue per year. They produce and sell flower, concentrates, edibles, and topicals. Though they currently wholesale much of their harvest and are expanding their cultivation, GTI has said they may not choose to be a large wholesale grower in the long term if price compression becomes an issue with that model. If that happens they will likely focus on creating brands and operating dispensaries.
GTI operates 260,000 sf of cultivation and processing capacity, which is scalable up to 750,000 sf. They do not disclose what portion is grow space versus processing space. If 50-75% is cultivation space, we expect them to produce between 15,000-22,000 kgs/per year, scalable up to 40,000-60,000 kgs per year.
They grow 50 unique cannabis flower strains, geared to different consumer segments. They also process raw flower into oils, using several extraction and purification techniques (BHO, CO2, Ethanol). Their current production is 22,000+ Kg/Year with future production slated at 60,000 Kg/Year.
Why do we Recommend Green Thumb Industries as a strong cannabis stock for 2020?
There are many reasons to like GTI marijuana stock as an interested observer. The company is vertically integrated, with a focus on building brands, and creating a unique and attractive retail experience that builds loyal visitors. This supports their bid to preserve strong margins in an industry that will likely eventually experience price compression and falling margins.
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. We think that $400-430 million is a good estimate of where their future revenue could 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 and will cause these companies to inevitably shutter their doors.
Bottom Line: Is Green Thumb Industries a Good Marijuana Stock Investment?
All this is promising news. But does it make GTI a good marijuana stock investment? For many, this depends on how much money they will generate in the future, versus how much revenue is baked into their current stock price.
The 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?
Is it too late to buy this marijuana stock?
No. In fact, we think this is a good company that is fairly priced today for revenue the company should achieve in the coming years.
Given their current and future production of 50,000-60,000 kgs a year we believe that $400-430 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 good long-term investment, not a 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.
The Marijuana Stock for the Big 2020 Rebound
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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