CURLF: 2 Cannabis Multi-State Operators Up More than 40% YTD

Cannabis stocks have been performing well this year as several states are moving towards legalizing marijuana for recreational use. Virginia will become the 16^th state in the United States and the first in the south to legalize cannabis for adult use. Gov. Ralph Northam signed the measure into a law this year.

With Chuck Schumer and two other Democratic senators pushing for marijuana legislation that would end a federal prohibition of the plant this year, the shares multi-state marijuana operators Curaleaf Holdings, Inc. (CURLF) and Acreage Holdings, Inc. (ACRHF) are strategically positioned to achieve new levels this year.

The growing cannabis market presents a huge opportunity for these companies. As such, they are now increasing their capacity and dispensaries in key states and high-growth markets. Some up-and-coming cannabis companies have delivered significant returns so far this year and we think still have plenty of room to grow.

Curaleaf Holdings, Inc. (CURLF)

Headquartered in Wakefield, Massachusetts, CURLF is an integrated medical and wellness cannabis operator in the United States. The company operates through two segments – cannabis operations and non-cannabis operations. It offers hemp-based CBD products, vaporizing oils, cartridges, concentrates, capsules, mints, edibles, and flower pods.

Last month, the company announced plans to expand certain products into Utah. Its Select Elite product will be available to patients at medical cannabis pharmacies across the state. CURLF also plans to launch more diverse product offerings under the brand in the coming months to meet increasing medicinal needs.

Also, in February, CURLF celebrated the opening of a new branded location in Maine, which marks its 101st store in the country. This new store will provide convenient curbside pick-up services and expanded access to the company’s high-quality medical cannabis products to its customers.

CURLF’s total revenue has increased 195% year-over-year to $182.41 million in the third quarter, ended September 30, 2020. Its gross profit on cannabis sales grew 279.9% from its year-ago value to $89.67 million, while its adjusted EBITDA increased 305% year-over-year to $42.3 million. The company reported a net loss of $9.34 million and a loss per share of $0.01 over this period.

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In terms of trailing-12-month ev/sales, CURLF is currently trading at 24.59x, 185.5% higher than the industry average of 8.61x. Also, in terms of its trailing-12-month price-to-book ratio, CURLF is trading at 7.96x, 66.2% higher than the industry average 4.79x.

CURLF beat the Street’s EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $1.27 billion for the current year represents a 99.1% increase from the same period last year. The stock has gained 42.1% year-to-date.

Acreage Holdings, Inc. (ACRHF)

Formerly known as High Street Capital Partners, ACRHF is an investment firm holding a portfolio of cannabis cultivation, processing and dispensing operations in the United States. The company has quickly evolved to become a leading, vertically integrated multi-state operator after entering the cannabis industry in 2011 with an investment in a Maine license.

Last month, the company’s subsidiary, High Street Capital Partners, entered an agreement with Red White and Bloom Brands, to sell all the shares of Acreage Florida for $60 million. The agreement also involves the sale of property in Sanderson, Florida. ACRHF intends for the cash proceeds to boost the company’s balance sheet and position it for significant long-term growth.

Also last month, ACRHF appointed Steve Goertz to the position of Chief Financial Officer, effective April 2. His 25 years of experience in finance and capital markets and deep expertise in complex transactions should help him lead the company towards long term growth.

ACRHF’s reported revenue increased 42% year-over-year to $31.7 million in the third quarter, ended September 30, 2020, while partner revenue increased 79% from the year-ago value to $17.0 million. Its gross margin grew 110 basis points sequentially to 42.5%. However, the company reported a net loss of $35.7 million and an adjusted EBITDA loss of $6.9 million.

In terms of trailing-12-month ev/sales, ACRHF is currently trading at 5.81x, 32.5% lower than the industry average 8.61x. Also, in terms of trailing-12-month price-to-book, it is trading at 2.85x, 40.5% lower than the industry average 4.79x.

A consensus revenue estimate of $216.19 million for fiscal 2021 indicates a 43.2% improvement year-over-year. Also, the stock has gained 117.8% year-to-date.

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CURLF shares were trading at $17.12 per share on Wednesday morning, up $0.11 (+0.64%). Year-to-date, CURLF has gained 43.00%, versus a 2.77% 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...