Trulieve: Top Cannabis Stock for 2021
The global cannabis industry is set to quadruple in the next six years from a $20 billion industry to a $90 billion one. Post Biden’s win, the industry has found a new reason to cheer. The new administration’s pro-pot stance will further catalyze growth in the cannabis industry. Trulieve Cannabis is a Florida-based multistate cannabis operator (MSO) that has caught everyone’s eye with its massive 350% YoY growth. It currently meets about half of the state’s medical marijuana requirement and unlike most other cannabis operators, it has been consistently making profits in the last 11 quarters. But why is Trulieve the Top Cannabis Stock for 2021?
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Another Profitable Quarter for Trulieve
When most business houses were struggling for gains this year, Trulieve reported yet another excellent quarter. Revenue for the quarter shot up to $136.3 million which is an all-time high. The recorded revenue was 13% more than the previous quarter and 93% higher when compared to the same period last year. Following the revenue rise, adjusted EBITDA also shot up by 11.6% and 82.9% compared to the last quarter and last year respectively.
However, despite all the revenue gains, its net income for the third quarter fell significantly to $4.7 million from the $60.2 million of last year’s third quarter. The company attributed such a fall to those numerous expansion programs it believes will significantly boost its revenues in the coming days.
Trulieve’s balance sheet for the last quarter indicates a strong liquidity position. Its nine-month operating cash flows of $73.7 million and an available cash reserve of $193.4 million prove the company still has ample resources for making future expansions in the growing market.
Trulieve: Huge Growth Opportunities
Florida has one of the most attractive cannabis markets in the USA and is one of the fastest growing ones in the medical marijuana space. Having its operations mainly focused on this market is working out pretty well for Trulieve. About 20% of the Florida population consists of old people with medical conditions. It’s a huge customer base. Currently, Trulieve owns a significant 52% market share in this huge market which helps it maintain a steady growth in its revenues.
However, having exposure to multiple states also has its own benefits. Trulieve has started expanding its operations beyond Florida to some major cannabis consuming states like California, Pennsylvania, Connecticut, and Massachusetts which as per BDS Analytics would expectedly reach $7.4 billion, $770 million, $355 million and $1.46 billion respectively by 2025. Additionally, it is also intending to open 4 dispensaries in the West Virginia market by this year.
Apart from expanding across multiple states, Trulieve has also strategically acquired a series of brands like Solevo Wellness, PurePenn, The Healing Corner, and Leef Industries. With these, it got its required operation license, cultivation space and access to multiple retail stores in the states where these brands operate along with the added opportunity of serving patients in those huge multi-million dollar markets.
Bottom Line: Why is Trulieve the Top Cannabis Stock for 2021?
Cannin.com members may recall our ‘Strong Buy’ recommendation for this cannabis stock back in 2019. And again in early 2020. Although the value has gained significantly since then, we still believe Trulieve is the top cannabis stock for 2021.
Even after such a terrific run, Trulieve stock is still cheaper than many of its peers. It might not be active in many states but with this slow expansion strategy and focusing mainly on the Florida market, it has built a good name for itself in the medical marijuana market apart from generating strong financials.
Expansions are costly and most of the time require M&As with others. By following this slower approach, Trulieve can conserve cash while taking baby steps towards expansion. However, this may also prove to be disadvantageous for the company as rivals will already have strong footings in those states.
Amidst the sea of unprofitable and unpredictable cannabis stocks, a stock like Tuelieve is rare and is an ideal bet for growth investors. The stock is currently trading at ( ). The cannabis market presents a huge growth opportunity and if the company follows the same strategy it adopted for the Florida market, it will slowly entrench itself in every market it enters – making it the top cannabis stock for 2021.
Trulieve: Top Cannabis Stock for 2021
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