Cannabis stocks in the U.S. markets are poised to deliver market-beating returns to long-term investors given the recent wave of legalization across several states. Additionally, if marijuana is legalized at the federal level for recreational and medicinal use, cannabis stocks will stand to benefit from a rapidly expanding market. But what are the top 5 cannabis stocks to watch now?
The analysts at Cannin have compiled a list of the best cannabis stocks to watch. These companies will also find it easier to access traditional forms of capital to fund their expansion plans.
Unlike their Canadian counterparts, marijuana stocks in the U.S. are racing towards profitability and growing top-line at a robust pace. Here, we look at the top 5 marijuana stocks that you should consider right now.
A mid-cap marijuana stock valued at a market cap of $1.25 billion, Columbia Care is one of the largest multi-state operators in the U.S. with 99 dispensaries and 31 cultivation and manufacturing facilities. Its sales have increased from $77.5 million in 2019 to $179.5 million in 2020. In the last 12-months, its sales have risen to $313 million.
Analysts expect sales to touch $1.45 billion in 2024 making it one of the most undervalued stocks in the cannabis sector right now. Columbia Care is down close to 60% from all-time highs and Wall Street expects the stock to almost triple in the next 12-months given its average price target of $9.38.
Another marijuana stock that can double in the next year is Jushi Holdings. In the second quarter of 2021, Jushi Holdings sales grew by 220% year over year to $47.7 million. It reported a net income of $4.8 million on the back of a $21.1 million gain due to fair value adjustments.
Related: Why is Jushi Holdings a Strong Buy?
Jushi has cannabis stores in several states including California, Pennsylvania, Virginia, and Illinois. In the next year, the company has forecast sales between $375 million and $425 million valuing the stock at a forward price to sales multiple of less than 2x.
Planet 13 Holdings
Valued at a market cap of $818 million, Planet 13 Holdings stock is down 48% from all-time highs. It has established a significant presence in Nevada due to the popularity of its SuperStore which is located on the Las Vegas strip. Planet 13 Holdings confirmed it will open two other SuperStores in Florida and Illinois.
Planet 13 Holdings sales have risen from $21 million in 2018 to $70.5 million in 2020. Its top-line is forecast to rise by 125% year over year to $158 million this year and by 54% to $244 million in 2022. This will allow the company to report earnings per share of $0.19 in 2022,
compared to a loss of $0.05 in 2020.
Green Thumb Industries
One of the largest cannabis companies in the world, Green Thumb Industries has returned 253% in the last five years. Despite these stellar gains, the marijuana stock is trading 37% below its multi-year high.
Its sales have risen from $63 million in 2018 to $556 million in 2020 and are forecast to increase to almost $900 million in 2021 and to $1.2 billion in 2022. In the second quarter of 2021, the marijuana heavyweight increased sales by 85.4% year over year to $222 million and a net income of $22.1 million.
Related: Top Hemp Stocks to Watch in 2021
It was the fourth consecutive quarter where Green Thumb reported adjusted profits and the sixth consecutive quarter of positive operating cash flow. Solid improvements in profit margins will enable Green Thumb to accelerate expansion plans by focusing on accretive acquisitions in the future. In 2021, it has already acquired three companies to gain traction in Massachusetts.
At its current growth rates, Green Thumb’s sales are on track to deliver a revenue run rate of $1 billion making it one of the best multi-state operators to buy right now.
The final top 5 cannabis stock on our list is TerrAscend Corp which is valued at a market cap of $1.10 billion. A company with operations in Canada and the U.S., TerrAscend recent announced its intention to acquire Gage Growth which will allow the combined entity to expand its presence in five states across 34 stores.
Gage Growth has a massive presence in Michigan, a state which generated less than $1 billion in cannabis sales last year.
In the second quarter of 2020, Gage Growth sales stood at $26.4 million, which was a growth of 130% year over year. Its EBITDA loss narrowed from $3.8 million in Q1 to $1.9 million in Q2 due to improvements in gross margins.
Comparatively, TerrAscend sales rose by 72% to $58.7 million in Q2. The company almost tripled its adjusted EBITDA to $24.3 million in Q2. The two companies are on track to deliver $340 million in annual sales when the acquisition closes.
We can see that given the growth estimates of the marijuana stocks listed here and their low valuation ratios, investors can build an enviable portfolio that consists of undervalued cannabis companies.
Cannin’s Top 5 Cannabis Stocks to Watch Now
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Top 5 Cannabis Stocks to Watch Now