Cannabis stocks in the U.S. have delivered outsized gains to investors over the last few years. These companies are part of a rapidly expanding addressable market due to the recent wave of legalization in the country. As several states have legalized marijuana for medical and recreational use, cannabis stocks including Curaleaf (OTC: CURLF) and Jushi Holdings (OTC: JUSHF) have managed to grow top-line and improve profit margins at a stellar rate.
Further, there is optimism that the government will decriminalize or even legalize marijuana use for recreational purposes at the federal level in the next few years, which would likely send pot stocks to record highs in the process.
Keeping these factors in mind, let’s see whether Curaleaf or Jushi Holdings is a better cannabis to bet on right now.
Curaleaf Holdings is one of the largest marijuana companies in the world, in terms of revenue. It has managed to increase sales from $19.3 million in 2017 to $626.63 million in 2020. This has allowed the company to improve its profit margins as well. Curaleaf’s operating loss stood at $28.7 million in 2018 and it reported an operating income of $63.86 million in 2020.
Curaleaf is a multi-state operator and has established a presence in 23 states. It has over 100 dispensaries and recently announced a partnership with Rolling Stone to improve the brand positioning of its Select group of products.
In May 2021, Curaleaf disclosed the acquisition of Los Suenos which is a Colorado-based cannabis company. This deal should help Curaleaf gain traction in one of the largest marijuana markets in the U.S.
In Q1 of 2021, the company reported sales of $260 million and an adjusted EBITDA of $63 million. It remains on track to grow its revenue to $1 billion in 2021 which means the stock is trading at a forward price to sales multiple of 9.6x which is reasonable.
The cannabis heavyweight recently raised $300 million to expand into other states such as New York and New Jersey which recently legalized marijuana sales. Curaleaf is also launching medical marijuana products in Germany which is the largest market in Europe.
Valued at a market cap of $950 million, Jushi Holdings is a much smaller player compared to Curaleaf. Jushi Holdings flies under the radar but is a quality growth stock that can crush broader market returns in 2021 and beyond.
The company has increased its sales from just $10.22 million in 2019 to $80.77 million in 2020. This spectacular growth has allowed Jushi to narrow its operating loss from $30.67 million to $8.4 million in this period.
In the first quarter of 2021, Jushi Holdings reported sales of $41.7 million, an increase of 385% year over year. The company is on track to report over $150 million in annual revenue in 2021 which means its trading at a price to 2021 sales multiple of 6.33x.
Jushi operates in seven states and is focused on productive regions with limited licenses. It has 20 dispensaries in the U.S. of which 13 are located in Pennsylvania. The company also has four dispensaries in Illinois. Jushi recently announced a $110 million acquisition of Nature Remedy that has two dispensaries in Massachusetts as well as a cultivation facility here.
We can see that both Curaleaf and Jushi are solid bets for long-term growth investors. The two companies are rapidly expanding their presence in the U.S. and other regions while still trading at an attractive valuation. However, Jushi’s lower metrics make it a better stock to own as it has higher upside potential.
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CURLF shares were trading at $13.92 per share on Wednesday afternoon, up $0.12 (+0.87%). Year-to-date, CURLF has gained 16.27%, versus a 16.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditya Raghunath
Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...
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