Of late, the cannabis industry has been grabbing significant investor attention as the push for the plant’s and its derivatives’ legalization and potential federal decriminalization increases in the United States. With legalization movements expanding into new states and with some U.S. Senators advocating for reforms to end the federal prohibition on marijuana, cannabis producers have the potential to soon break into new, major growth markets.
Nor is it just the adult-use markets that are driving the industry’s growth. Medical markets, such as those in Arizona and Florida, are contributing significantly. This trend could act as a catalyst for expansion in New York, Pennsylvania and other neighboring states. The shifting government attitude toward marijuana and the growing demand for its recreational and medical use should bode well for affordable pot stocks with strong footprints.
Columbia Care Inc. (CCHWF), Planet 13 Holdings Inc. (PLNHF), and Jushi Holdings Inc. (JUSHF) are three cannabis stocks that are currently trading below $10. We think continued efforts to capitalize on favorable regulatory tailwinds position these stocks to deliver hefty returns in the coming months.
Columbia Care Inc. (CCHWF)
Founded in 2012, CCHWF is a cultivator, manufacturer, and seller of medical and adult use cannabis products and related services. The company operates 80 dispensaries and holds licenses in 18 jurisdictions in the U.S. and the E.U.
Last month, CCHWF raised C$28.98 million in a private placement offering. The company intends to use the offering’s proceeds for working capital and general corporate purposes.
In January, CCHWF launched its adult-use cannabis sales in Arizona at its SWC dispensaries in Tempe and Prescott. This should help the company to offer its diverse product portfolio to a new customer base in Arizona and thereby bolster its long-term growth prospects.
CCHWF’s combined revenues increased 51% sequentially to $81.8 million in the fourth quarter, ended December 31. Its adjusted ebitda grew 124% sequentially to $9.47 million, while its adjusted gross margin rose 1700 basis points year-over-year to 42% over the period. The company’s adjusted gross profit increased 465% from its year-ago value to $33.98 million.
A consensus EPS estimate of $0.02 for fiscal 2021 represents a 104.2% improvement year-over-year. The consensus revenue estimate of $486.72 million for the current year represents a 171.1% increase from the same period last year. The stock closed yesterday’s trading session at $6.86, gaining 362.1% over the past year.
Planet 13 Holdings Inc. (PLNHF)
PLNHF is a producer, cultivator and distributor of cannabis and cannabis-infused products for the medical and retail cannabis markets in the United States. In addition, the company operates dispensaries and offers cardholder process navigation services, individual consultations, patient education services, express services, and home delivery services.
This month, the company reported that its award-winning brands are now available in 53 dispensaries in Nevada, including the SuperStore. As it continues to see strong demand for its unique in-house brands, this development will provide better access to its customers.
Also, this month, PLNHF entered a partnership with Curaleaf’s Select brand to create a unique shop-in-shop experience in the Las Vegas SuperStore. This should elevate PLNHF’s retail presence and enrich its customer experience.
PLNHF’ total revenue has increased 36.5% year-over-year to $22.8 million in the third quarter ended September 30, 2020. Its gross profit increased 27% from its year-ago value to $12.47 million, while its operating income grew 686.4% year-over-year to $3.64 million. The company’s adjusted ebitda rose 82.4% year-over-year to $6.2 million over the period.
A consensus EPS estimate of $0.09 for 2021 represents a 400% improvement year-over-year. The consensus revenue estimate of $127.45 million for the current year represents a 98.1% increase from the same period last year. The stock closed yesterday’s trading session at $6.81, gaining 646.2% over the past year.
Jushi Holdings Inc. (JUSHF)
JUSHF is a cannabis and hemp company that 11 retail locations under the BEYOND/HELLO retail brand. The company i cultivates, processes, and retails t medical and adult-use products in various jurisdictions in Pennsylvania, Virginia, Ohio, Illinois, California, and Nevada.
This month, JUSHF opened the eleventh BEYOND/HELLO medical marijuana dispensary in Pennsylvania and its seventeenth BEYOND/HELLO retail location nationally. The company will offer its customers online shopping at beyond-hello.com, along with convenient curbside or in-store express pickups. As JUSHF expands its footprint in the state, this new dispensary should help it meet the robust demand for its products.
Last month, JUSHF closed an offering of subordinate voting shares that raised C$74.75 million. The company intends to use the proceeds for potential strategic transactions, acquisitions, and business expansion opportunities.
JUSHF’ revenue has grown 67% sequentially to $24.91 million in the third quarter ended September 30, 2020, driven by strong growth at its BEYOND/HELLO stores in Illinois and Pennsylvania. Its gross profit rose 64% sequentially to $12.25 million. The company’s adjusted ebitda in the third quarter was $1.9 million, compared to an adjusted ebitda loss of $1.2 million in the second quarter of 2020.
A consensus EPS estimate of $0.01 for 2021 represents a 101.8% improvement year-over-year. The consensus revenue estimate of $216.29 million for the current year represents a 181.6% improvement from the same period last year. The stock closed yesterday’s trading session at $7.40, gaining 818.1% over the past year.
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CCHWF shares were trading at $6.87 per share on Thursday morning, up $0.01 (+0.10%). Year-to-date, CCHWF has gained 13.55%, versus a 5.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More…
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