Last year was a banner year for the cannabis industry, with U.S. cannabis sales hitting a record $24 billion. And the industry’s sales are expected to reach $70 billion by 2028. An increasing demand for cannabis oil for therapeutic needs from an aging population and increasing consumer demand for innovative recreational cannabis products should drive the industry’s growth. With cannabis companies prioritizing risk management, the United States is expected to see legal sales of $30 billion in 2022.
High public support for legalization, an increase in corporate support, and the re-introduction of some federal legalization bills bode well for the industry. The U.S. House of Representatives’ Rules Committee cleared a marijuana banking amendment for another floor vote this week.
Given this backdrop, Wall Street analysts expect fundamentally sound cannabis stocks Trulieve Cannabis Corp. (TCNNF), Cresco Labs Inc. (CRLBF), and Columbia Care Inc. (CCHWF) to soar in price in the coming months.
Trulieve Cannabis Corp. (TCNNF)
TCNNF is a medical-based company that cultivates, produces, and distributes its products to dispensaries throughout Florida. The Quincy, Fla.-based concern offers a range of products that include flowers, edibles, vaporizer cartridges, concentrates, topicals, capsules, tinctures, dissolvable powders, and nasal sprays. It operated in 111 dispensaries as of Dec.8, 2021.
Last month, TCNNF partnered with Miami Mango, a South Florida-based cannabis company. Through the partnership, Miami Mango’s popular Mango Haze should be the first strain launched for TCNNF’s medical patients in the South Florida Market. TCNNF believes that it will provide quality and a broader selection of products to Florida’s medical cannabis community.
TCNNF’s total revenue increased 64.4% year-over-year to $224.1 million for the third quarter, ended Sept. 30, 2021. The company’s gross profit grew 50.6% from its year-ago value to $153.9 million. Its net income rose 6.9% from the prior-year quarter to $18.6 million, and the company’s adjusted EBITDA increased 42.6% year-over-year to $98 million.
TCNNF’s consensus revenue is expected to increase 80.8% to $350.41 million in the fiscal period ending March 31, 2022. The stock has gained 15.5% in price over the past five trading days.
Closing yesterday’s trading session at $21.97, the $57.06 average analyst price target represents a 159.7% potential gain.
Cresco Labs Inc. (CRLBF)
Chicago-based CRLBF is a cannabis operator that manufactures a suite of cannabis extracts and vape products. The company offers a wide range of products, including vape pens, capsules, edibles, sublingual oils. It operates under the brand names Cresco, High Supply, Good News, Wonder Wellness Co., Remedi, Reserve, Flora Cal, Mindy’s Edibles, and Kiva.
Last month, CRLBF partnered with Wiz Khalifa to launch flowers and pre-rolls from Khalifa Kush. Khalifa Kush contained flowers, pre-rolls, vapes, and other products. These products will be available for sale at cookie stores throughout California.
CRLBF’s revenue increased 40.6% year-over-year to $215.48 million for the third quarter, ended Sept.30, 2021. The company’s gross profit grew 41% from its year-ago value to $108.32 million. Its cash and cash equivalents rose 85.4% to $252.84 million for the nine months ended Sept.30, 2021.
The $260.53 million consensus revenue estimate for CRLBF for the fiscal period ending March 31, 2022, represents a 46% increase year over year. Its EPS is expected to increase 133.3% next quarter. Furthermore, the stock has soared 4.5% in price over the past month.
The consensus price target of $19.33 represents a 177.3% potential gain from the last closing price of $6.97.
Columbia Care Inc. (CCHWF)
CCHWF is a New York City-based, multi-state operator in the medical cannabis industry that offers a wide variety of health and wellness brands and derivative products. The company also offers flowers, edibles, oils, and tablets under the Seed & Strain, Triple Seven, Press, Amber, Platinum Label Cannabidiol, and other brands. As of Jan. 3, 2022, it operated 131 facilities, including 99 dispensaries and 32 cultivation and manufacturing facilities.
Last December, CCHWF formulated medical cannabis extract vaporizer pen products in a U.K.-based manufacturing facility approved by the U.K.’s Medicines and Healthcare products Regulatory Agency (MHRA) and Home Office. Through the formulation, CCHWF should be able to provide patients with access to quality medicinal cannabis products.
During the third quarter, ended Sept. 30, 2021, CCHWF’s revenue increased 171.7% year-over-year to $132.32 million. The company’s gross profit grew 146.8% from its year-ago value to $72.29 million. And its cash rose 91.3% to $116.93 million for nine months ended Sept. 30, 2021.
For its fiscal year 2022, CCHWF’s revenue is estimated to be $704.65 million, representing 46.9% year-over-year growth. The company has surpassed the consensus EPS estimates in three of the trailing four quarters. Analysts expect the company’s EPS to increase 72% next year. The stock has advanced 2.8% in price over the past month.
Currently trading at $2.94, the average analyst price target of $11.04 represents a 275.5% potential upside.
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TCNNF shares were trading at $21.73 per share on Wednesday afternoon, down $0.24 (-1.09%). Year-to-date, TCNNF has declined -16.46%, versus a -3.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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