Despite the economic stagnation in much of North America, all first results in the cannabis sector were surprisingly positive. Due to the medical cannabis aspects of the sector, most retail stores were considered essential to keep the stores open.
U.S. and Canadian consumers have flooded retail stores and online websites to buy cannabis products due to concerns and economic shutdowns, and potential store closures. Oddly enough, despite positive industry trends at the beginning of 2020, stocks generally didn’t bounce back.
California and Washington areas saw sales double approximately between March 13-17. In more than 1,300 stores using the Jane Technologies cannabis e-commerce platform, average store sales in more than 1,300 stores increased by around 100%. Several other key figures recorded massive product demand in mid-March.
All the news is not optimistic as Massachusetts has closed recreational cannabis stores, Nevada stores have seen sales decline due to a lack of tourists, and Canopy Growth has closed 23 stores in Canada. In addition, sales are already returning to a normal level as customers withdraw from aggressive purchases as soon as they find that the stores remain open even during the block.
Several cannabis companies have recently released solid quarterly reports that should only benefit from higher sales during the coronavirus outbreak along with company-specific catalysts in 2020.
We looked at these three companies with solid earnings and positive prospects for a strong March quarter and full year 2020. We also looked through the lens of TipRanks’ stock comparison tool to find out what makes it special. Let’s dive in
<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Curaleaf (CURLF)“data-reactid =” 26 “>Curaleaf (CURLF)
The largest cannabis game under the radar remains Curaleaf Holdings. The company reported pro forma sales of over $ 131.7 million in the fourth quarter to lead the cannabis space.
The amount far exceeds the $ 123.8 million generated by Canopy Growth, while Curaleaf achieves an EBITDA positive result that is far better than Canopy Growth’s constant EBITDA loss of $ 90 million.
The astonishing part is the lukewarm response to the results due to the indication that the recent Select acquisition underperformed. The company achieved a minimal third-quarter pro forma sales increase of $ 129.1 million, noting that Select’s offsetting strong results from Curaleaf and Grassroots resulted in only $ 5 million in monthly sales Dollars. The brand had $ 35 million in quarterly sales when the merger was announced, and competitive California and vape health issues weighed heavily on sales.
The stock is only trading at $ 3.50 after hitting around $ 7.50 earlier this year, and the company is positioned for an increase in Illinois sales due to grassroots and a recovery in select sales of vapes and expanded distribution. In addition, Curaleaf saw an increase due to the initial increase in sales from ordering the virus outbreak at home. The stock has a market valuation of just $ 1.7 billion, with sales still rising to $ 1 billion this year and an excellent entry point.
The analysts are also optimistic about the Curaleaf share. 6 assigned purchases in the last three months and 1 hold result in strong analyst consensus. In addition, the average price target of $ 9.68 puts the potential profit at over 170% after twelve months. (See Curaleaf stock analysis on TipRanks)
<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Green Thumb Industries (GTBIF)“data-reactid =” 44 “>Green Thumb Industries (GTBIF)
Green Thumb Industries is a leader in several states and has seen rapid growth due to the legalization of recreational cannabis in Illinois and medical cannabis in Pennsylvania. The company reported sales of $ 75.8 million in the fourth quarter and resulted in 20% sales growth in the first quarter as most medical cannabis shops are seen by the states as essential and remain open.
Although Curaleaf has made no forecast for the quarter, Green Thumb appears to be more confident that the virus outbreak will have no impact on sales, especially given that the quarter was almost over when the company reported fourth quarter results. Green Thumb achieved adjusted operating EBITDA of $ 14.4 million in the fourth quarter as the company continues to operate efficiently.
Similar to other cannabis stocks, Green Thumb is down about 50% from its highs a few months ago. The stock had a 52-week high above $ 16 and is now trading at $ 5.5 despite these strong quarterly results.
With 215 million shares outstanding at the beginning of 2020, Green Thumb has a market capitalization of $ 1.2 billion. The company is expected to generate sales of $ 450 million in 2020 and up to $ 680 million in 2021. The stock is becoming more of a bargain as investors view the 2021 earnings as legitimate given the strong recreational sales in Illinois and the potential growth in other states.
Fortunately, 6 out of 7 analysts have published a buy rating for the share, according to TipRanks. Your average price target of $ 14.63 corresponds to an upside potential of 158% compared to the current share price. (See Green Thumb stock analysis on TipRanks)
<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "MediPharm Labs (MEDIF)“data-reactid =” 58 “>MediPharm Labs (MEDIF)
Another company that is still in expansion mode is MediPharm Labs. The Canadian cannabis extraction company was built for profitable growth, and the company remains on track to expand internationally in 2020, while other Canadian companies rule in global ambitions.
Fourth quarter sales increased more than 200% from the previous quarter to $ 32.4 million, but sales decreased from $ 43.4 million in the previous quarter. Sales and profits were affected as the Canadian market was oversupplied with wholesale oil. However, MediPharm Labs continued to generate gross profit of $ 10.0 million and EBITDA of $ 2.7 million.
The company closed a year in which sales reached $ 129.3 million and adjusted EBITDA was an impressive $ 24.7 million. MediPharm Labs is positioned for growth in 2020 as cannabis 2.0 products are launched in Canada. The company is expanding internationally after just receiving GMP certification from the Therapeutic Goods Administration in Australia.
Despite these positive results, the stock has dropped to almost $ 1. With a market cap of just $ 155 million, MediPharm Labs is cheap compared to expected sales increases to nearly $ 120 million or $ 170 million this year and up to $ 170 million in 2021. As more retail stores and cannabis 2.0 products sell in Canada, the cannabis extraction company will see a recovery in earnings, making the stock a bargain near $ 1 down here.
Indeed, the stock has a confident strong buying consensus from the street. TipRanks shows that the average price target for analysts is $ 4.37, which means an upward trend of over 300% in the next 12 months. (See MediPharm stock analysis on TipRanks)
<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "To find good ideas for trading cannabis stocks at attractive ratings, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all the insights into TipRanks’ stocks.“data-reactid =” 72 “>To find good ideas for trading cannabis stocks at attractive ratings, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all the insights into TipRanks’ stocks.