With 3 Consecutive Quarters of Positive Cash Flow, is Green Thumb Industries a Buy?
Recent Congressional approval to decriminalize cannabis at the federal level didn’t give cannabis stocks the bump investors had hoped for as the bill will likely die on the Senate floor. Many cannabis investors are aware of this and should continue to focus on companies in the sector that have solid fundamentals. Green Thumb Industries (GTBIF), headquartered in Chicago, is one such company that operates in the health and wellness space through cannabis. As most cannabis companies focus on expansion, to the detriment of their bottom lines, Green Thumb Industries has been consistently reporting positive EBITDA over the past three quarters and is poised for a profitable 2021. With 3 Consecutive Quarters of Positive Cash Flow, is Green Thumb Industries a Buy?
Cannin’s Analysts Recommended GTBIF back in May of 2020. Had you taken our recommendation, you would have more than doubled your investment
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GTBIF: Much Improved Financial Performance
Amidst the coronavirus chaos in 2020 and an economic dip, Green Thumb Industries has successfully delivered a powerful quarter. Its continued scale of operations and increased operating leverage delivered an EBITDA jump of 50.2%.
Revenue increased by 31.3% when compared quarter on quarter or by a massive 131.1% when compared to the same period in 2019. The major highlight of this quarter was the positive net income of $9.6 million which is the first time that the company had reported a positive net income. The gross margin for the third quarter of 2020 was 55.4% compared to 53.2% for the prior quarter.
Green Thumb’s expansion aided in achieving higher revenues. The company has cash and cash equivalents of $78.1 million which can be used for the company’s future expansion programs. Green Thumb attributes its improved performance to its capital projects in Illinois, New Jersey, Pennsylvania, and Ohio, and the rebound in its operations at Nevada and Massachusetts following the initial impact of COVID. Now, GTBIF seems confident to deliver even better performances in the coming years – but is Green Thumb Industries a Buy?
Green Thumb’s Growth & Expansion Plans
Green Thumb sold its products in 11 states in the USA until the end of the third quarter. By this quarter it completed its initial phase of construction of a manufacturing facility in Illinois and added distributing capabilities in two new markets, New Jersey and Ohio, in this quarter.
GTBIF expanded its brand portfolio by launching its new product “Snoozzzeberry Gummies” under its Incredibles brand in Illinois and Nevada. Green Thumb operated 48 stores in 10 states at the end of the third quarter. Retail revenue increased sequentially by 27.9% quarter-over-quarter. The company acquired two more stores in Pennsylvania and Illinois.
Green Thumb Industries also undertook a series of brand building activities to increase its presence in consumer minds. It launched the “License Education Assistance Program (LEAP)” which is a cannabis business incubator. It also partnered with The “Last Prisoner Project” (LPP), which is a coalition of the leading players of the cannabis industry, executives as well as artists to bring justice to the cannabis industry – led by Cannabis Icon, Steve DaAngelo.
With 3 Consecutive Quarters of Positive Cash Flow, Is Green Thumb Industries a Buy?
The stock is currently trading at [stock_market_widget type=”inline” symbol=”GTBIF” template=”basic” color=”default”]. Analysts have given it a target of $28.15. That’s an upside of almost 31% at the time of this publication. Going by its management estimates Green Thumb appears to be in its growth phase. It is fiscally responsible and it has maintained a stellar image with consumers. GTBIF continues to impress investors with consistent gains.
GTBIF’s strategic expansions are only adding to its popularity and financial growth. A growth stock is always worth the buy. So if you are already holding its stock, don’t plan on selling it now. If you are planning for some long-term investment then Green Thumb might be one of the best cannabis stocks for 2021.
With 3 Consecutive Quarters of Positive Cash Flow, is Green Thumb Industries a Buy?
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