Top 3 Cannabis Stocks to Buy for the Big 2020 Rebound
Our analysts have identified three of the top cannabis stocks that can survive and thrive through the coronavirus crash. They’ll likely be apart of the Big 2020 Rebound. They might even be the best buy and hold cannabis stock investments for 2020.
Markets in the United States and across the globe have been significantly impacted by the selloffs that came as a result of the coronavirus. Although, cannabis stocks have experienced a slight bump in the last couple of weeks as they have been determined by consumers and governments alike to be “essential businesses”.
Medical cannabis patients and recreational adult-use cannabis consumers stocked up on cannabis products significantly in preparation for lockdowns, extended quarantines, and the possibility that federal or local state governments would order that all cannabis dispensaries should close to prevent the spread of coronavirus.
Now, that dispensaries across the U.S. have been labeled as “essential businesses”, the cannabis market is beginning to recover from fears that cannabis dispensaries would temporarily be closed. Currently, cannabis investors can find some of the best buy-and-hold marijuana stocks, at a deep-discount, which will likely be apart of the Big 2020 Rebound.
We believe the top three pot stocks to buy for 2the Big 2020 Rebound are Planet 13, Aphria, and Curaleaf. All three companies have strong cash balance sheets, market presence, and diverse product offerings to get them through the coronavirus. But are Planet 13, Aphria, and Curaleaf all strong cannabis stock picks for 2020?
For starters, all three companies were able to generate sizeable amounts of revenues, some with incredible year-over-year increases and quarter-over-quarter increases, which allowed them to generate a sizeable profit. But why do these 3 stocks come so highly recommended?
Planet 13 is the holder of the world’s largest cannabis superstore and entertainment complex that is located in the entertainment capital of the world that is Las Vegas, Nevada. On top of that, the company has followed the coronavirus intensely and made sure to take every precaution necessary and recommended by federal and state health agencies. The company is more than prepared to take on any disadvantages brought about by the coronavirus. Three of the most important indicators that the company will strongly brave through the coronavirus are its switch to online delivery, virus-related record-breaking February edible sales, and significant debt reduction.
- Online Delivery: Planet 13 started online delivery services in direct response to the quarantines and lockdowns caused by the coronavirus. The company began to sell and distribute all of its widely-desired cannabis products on an e-commerce website. The online orders come with delivery services and the dispensaries are also operating as well. All of the company’s dispensaries are still performing core dispensary services in order to tend to any customers who are in need of medical or adult-use products.
- Cannabis Edible Sales Record: Cannabis edible sales of a handful of the company’s most popular brands managed to break a sales record in the month of February. The edible cannabis brands Haha Gummies, Dreamland Chocolates, TREDNI, Leaf & Vine, and Medizin all brought in $1 million in combined sales. These brands all set the record for sales in one month and the company announced this record-breaking sales figure in early March. Consumers would be more likely to continue into the cannabis edible product portfolio as they choose to order online and get deliveries made at their doorstep.
- Planet 13’s Debt Reduction: The company was no stranger to the process of taking on debt as most cannabis companies do. However, Planet 13 managed to significantly reduce its debt responsibilities in 2018. The company only had $4.25 million in debt and then reduced it to under $900,000 in March of 2019. The cash balance for Planet 13 reached $20.2 million and comes to a net cash total of $19.3 million. Other cannabis companies often struggle to reduce debt or take on more debt in order to expand and end up increasing their debt responsibilities even further.
Aphria has a strong presence in global cannabis markets. This strong international presence has allowed for its cash revenues to explode with acquisitions such as its newly acquired subsidiary, CC Pharma, in Germany. It also has managed to outperform other cannabis companies with its stock price on several occasions. Another strong point of contention is the ability of Aphria to weather through a short-seller report. The three reasons provided by our analysts that indicate a strong exit through coronavirus are its international coverage, cash balance sheet, and new cannabis edible portfolio.
- International Cannabis Market Coverage: As mentioned previously, the cannabis stock market coverage that Aphria has internationally, specifically in Germany has been tremendous for the company. The company’s new subsidiary CC Pharma generated an incredible amount of revenue for Aphria, nearly 72% of its total net revenues for Q2 2020. CC Pharma has been a huge point of revenue generation for the company since it acquired CC Pharma in early 2019.
- Aphria’s Cash Balance Sheet: Aphria has a very sizeable cash balance sheet that will help it endure any hardship it may experience during the coronavirus. The cash balance sheet tops out at just over $600 million. Aphria went through a period of non-essential asset liquidation and raised $460 million in convertible debentures. The company got the remainder of its cash balance sheet through $80 million in term debt and $160 million in equity.
- Edible Cannabis Products: The company recently debuted a cannabis edible product portfolio that was timed along with the legalization of cannabis edible products in Canada. Aphria was on the line with the wave of cannabis edible legalization as Canada’s edible legalization, nicknamed “Cannabis 2.0”, was effective on December 14th of 2019. Cannabis edibles sold by the company, those within its “Aphria Diamond” product line, were rated as one of the best edible products by consumers. Aphria Diamond edible products, specifically Good Supply and Riff, have the tetrahydrocannabinol (THC) and cost-per-gram with it to compete and dominate the cannabis 2.0 market.
Among all of the vertically integrated multistate cannabis operators (MSO) in the United States, none is larger than Curaleaf Holdings, Inc. (OTC:CURLF). Assuming they’re able to execute on their 2020 vision, Curaleaf will have 131 retail licenses spanning 19 states. Curaleafs recent acquisitions may allow them to hit their target of $1 billion in annual sales this year, according to the company’s management team.
Curaleaf has a strong presence in states that were chosen selectively in order to a bigger part in a state’s market that limits its issued cannabis licenses. The company has everything it needs with its strong presence in several states and solid financials. Curaleaf’s strong branding dominates as the largest chain of branded dispensaries in the United States.
All of its largest chain brand dispensaries are located in densely populated states, targeted specifically for larger consumer bases. According to our analysts, Curaleaf is set to persevere through the coronavirus based on its industry-veteran CEO, cash balance outlook, and its operational strength.
- Curaleaf’s Experienced CEO: The company’s CEO, Joe Lusardi, has over 10 years of experience with the cannabis industry and 20 years in entrepreneurship, finance, and private equity placements. Lusardi also is personally invested in the company, literally, with an investment he made with his own $500 million. He did this in order to grow the company and expand development, research, infrastructure, and the company’s staff.
- Cash Balance Outlook: Curaleaf is expected to have 71 cannabis dispensaries by the end of 2020 that will all contribute to its cash balances. The strategic positioning practice the company uses, selectively choosing high-density populations and license limit states, will ensure limited direct competition. The company’s cash balances will grow along with a continued expansion by Curaleaf in order to seize new cannabis market opportunities.
- Targeted Operation: During the company’s specific selection process, it chose over 11 states to do business in – specifically states that have a limit on the licenses it issues to cannabis operators. These states include Florida, Massachusetts, New Jersey, New York. Curaleaf has a presence in every state that limits the cannabis licenses that single operators can have. Also, the company will have a total of 71 cannabis dispensaries by the end of 2020.
These three cannabis companies have more than just three reasons each why they will weather the current storm that is the coronavirus. All three of the companies are part of the top 2020 cannabis stock picks by our analysts and they firmly believe that are all able to get through this period of time with relative ease. With the uncertainty of the overall global impact of the coronavirus, cannabis stock investing can be more complicated than ever. We hope this quick dive into the fundamentals of these exciting cannabis companies helps you make informed investment decisions during this time of great uncertainty. Happy investing.
Top 3 Cannabis Stocks to Buy for the Big 2020 Rebound
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