Cannabis Industry is down 40-50%, I'm in, you?

Perisher

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As can be seen in various Cannabis ETF like YOLO, THCX, the whole industry went down recently.
I sold mine at a high and recently got interested again when the whole industry had a near 50% fall.

Main reason from Fortune:
Cannabis stocks have plunged 50% from their highs earlier this year as a lack of movement in U.S. legalization efforts has triggered an exodus of retail traders from the sector.31 Aug 2021


Here are the 2 i previously own. 1 is Trulieve, the other is Curaleaf.
I have entered again. DYODD.

These 2 Cannabis Stocks Could Double (Or More), Says Analyst​


The past few years have seen a tremendous boost in the US cannabis industry, as 36 states have legalized the substance for medical or recreational use, or both, and several others have decriminalized it. At the Federal level, cannabis remains an illegal narcotic – but Federal law also prohibits prosecution of users who are in compliance with local state laws.

The industry is facing a number of headwinds, however, with the most serious being political in nature. Like so many headwinds these days, this originates with the partisan deadlock in Washington. Congress and the Biden Administration are finding it difficult to get major legislation passed into law, and so second-tier priorities, such as legalization of cannabis, are taking a back seat.

This hasn’t stopped the industry from raking in cash. Revenues are up as companies expand their sales operations – in the medical sector and in the recreational sector, as well as any miscellanies and incidentals the cannabis producers can figure out – into as many states as possible. And long-term investors remain optimistic that cannabis will see Federal legalization sometime in the next few years.

This has Pablo Zuanic, an analyst at Cantor, bullish on the long-term outlook for the cannabis industry. He sees plenty of upside available in most of the grow companies now operating, and in two of them, he sees capacity for shares to double in value – or more. We’ve used the TipRanks platform to look up the details on those two stocks, and found that they are hold Strong Buy ratings from the analyst consensus view.


Trulieve Cannabis (TCNNF)

We’ll start with Trulieve Cannabis, a major player among US medical cannabis companies. This Florida-based company has a ‘seed to sale’ model, starting with cultivation facilities totaling 2.2 million square feet and running through more than 100 stores in six states. Trulieve serves over half a million patients in the US, and offers more than 900 products across four brands in its line of dispensaries.

In the second quarter of this year, the most recent reported, Trulieve brought in revenues of $215.1 million, up 9.7% sequentially and an impressive 60% year-over-year. The company’s EPS came in at 32 cents, up by a factor of 8 from the 4 cents reported in the year-ago quarter.

The strong gains in earnings and revenues has come along with expansion of the company’s sales footprint. Trulieve has over 100 dispensary locations in the US, and in recent months announced several new stores in Florida. In addition to its home state, Trulieve has a presence in California, Connecticut, Massachusetts, Pennsylvania, and West Virginia.

In another expansionary move, Trulieve announced earlier this month that it will acquire Harvest Health & Recreation, a merger which will make Trulieve the largest US cannabis operator. The two companies together had over $317 million in revenues in Q2, and boast combined cash liquidity of $360 million. The acquisition will be an all-stock deal.

Covering Trulieve, Zuanic sees the company basing its success on a solid foundation in its home state of Florida. He writes, “We expect the company to protect market share in its home state. We understand the discount levers have been tactical and focused on those SKUs with the more-price sensitive consumers. In 4Q, in FL, the company should benefit from the new processing center in Tampa, with the Midway facility maxed out, which should help margins as well as SKU innovation. Of note, the company continues to add stores; since 3-13, it has added 13 stores, and Harvest expanded to 13 from six (together, both companies account for 55% of stores opened since 3-31 in the state).”

To this end, Zuanic rates Trulieve an Overweight (i.e. Buy) and describes the stock as a ‘top pick.’ His price target of $81 suggests room for 173% upside in the next year. (To watch Zuanic’s track record, click here)

Curaleaf (CURLF)

Next up, Curaleaf, is another of the cannabis industry’s giants. Curaleaf operates in 111 dispensaries in 23 states, and boasts 23 cultivation sties with approximately 2 million square feet of grow capacity. Curaleaf develops its products through 30 processing facilities, and has some 2,000 wholesale accounts. Where Trulieve leads the industry in grow facilities and number of stores, Curaleaf boasts an industry-leading market cap, over $6.9 billion.

Curaleaf’s Q2 revenues came in at $312 million. This was up 166% year-over-year, and marked the eighth consecutive quarter of sequential revenue gains. The company’s EPS, however, came in a net loss, of 1 cent per share. This was better than the 3-cent EPS loss reported in Q1, and equal to the 2Q20 net loss. The EPS loss fit the company’s consistent pattern; the deepest loss is recorded in Q4, and moderates in Q1 and Q2.

In an important move to expand its footprint, Curaleaf this month completed its acquisition of Los Suenos farms, the largest outdoor grow facility in Colorado. The acquisition brings to Curaleaf a total of 66 acres of outdoor cultivation and an indoor facility with 1,800 plants Also included are two retail cannabis stores serving adult recreational users. The move enhances Curaleaf’s access to Colorado’s $2.2 billion cannabis market.

Zuanic sees Curaleaf’s continued expansionary activities as a key point here, and writes of this cannabis producer: “The company has several cultivation expansion projects underway (FL, AZ, PA, NJ, NY) and plans to open another eight stores this year (in FL, AZ, NJ, and PA). From the current base of 37 stores in FL, it expects to be at 60 by YE22 (opening 4-6 this year). A lot of the new expansion will come through late in 4Q21 (which should help margins) and in 1H22. Further expansion in states like NY will depend on regulatory clarity (caps on canopy; timing of NY rec sales start, which is now expected by 1Q23 by management in NY). It expects to be operating cash flow positive by 4Q…”

Based on the above, Zuanic gives Curaleaf shares an Overweight (i.e. Buy) rating, along with a $24 price target. This target puts the upside potential at a whopping 110%.


Like Trulieve, Curaleaf has a unanimous Strong Buy consensus rating – but this is based on 9 recent analyst reviews. The shares have a current trading price of $11.39 and their $22.44 average target suggests a 97% upside from that level.
 
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Perisher

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Or you can simply pick a etf. The potential is there but cannabis industry as a whole ain't really profitable.
 

Perisher

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Btw, i bought them on CSE (Canadian Securities Exchange) using CAD on IB. So ya, this ain't in US.
 

exterminazn

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Cannabis counter can’t trade in us market is it?
 

Perisher

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Well, on Monday, Curaleaf seems to be proving that analyst right. It announced a $286 million cash-and-stock deal to buy privately held multi-state operator Tryke Companies, which cultivates, processes, and operates dispensaries to sell cannabis, and does business under the name "Reef Dispensaries."


Curaleaf will pay $40 million in cash up front for Tryke, plus a further $75 million and 17 million of its own shares to be paid out in installments over the next three years.

Now what​

Curaleaf expects to pull down an extra $110 million a year in sales at 35% EBITDA margins by bringing Tryke in-house, and says the deal will be "immediately accretive" to its EBITDA margins and free cash flow.

The deal values Tryke at about 7.4 times its EBITDA -- a mere fraction of the acquirer's own valuation -- and explains why Curaleaf shareholders are so happy with the news. The prospect of similar deals benefiting other companies in the industry -- as Cantor Fitzgerald predicted -- is probably part of the reason Hexo is up Monday, and why Canopy Growth was able to shrug off the weight of its analyst downgrades.

Finally, we learned over the weekend that U.S. Rep. Nancy Mace (R-South Carolina) is preparing to sponsor a Republican-backed bill to legalize marijuana. While it differs in a range of ways from the legalization bills that have been proposed by congressional Democrats, its addition to the conversation may improve the prospects of some cannabis reform bill or other passing -- and legalizing marijuana at the federal level once and for all.
 

Perisher

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A bearish article on Cura

So what​

So who was to blame for all this distress? In a word: Curaleaf. On Monday night, the Massachusetts-based cannabis cultivator delivered its third quarter results, which revealed that as its sales boomed in the period, its losses swelled as well.


Revenue surged by 74% year over year to $317 million. However, Curaleaf also reported an $0.08-per-share loss -- eight times worse than Q3 2020's $0.01 per share loss.

Perhaps more worrisome is the fact that year to date, Curaleaf has recorded 149% sales growth, which means that the 74% growth rate recorded in Q3, while objectively impressive, actually represents a significant slowdown in the pace of growth. The company is also now up to $0.12 in losses per share over the year's first three quarters -- and Q3's losses make up two-thirds of that total.

Now what​

Executive Chairman Boris Jordan attributed Q3's troubles to "transient headwinds," though, and insisted the Curaleaf "continued to execute well against our strategic initiatives, prioritizing growth and gaining market share." However, he also warned that Curaleaf is now likely to hit only the lower end of the company's announced 2021 revenue guidance range of $1.2 billion to $1.3 billion -- and he made no promise of profits besides.

Indeed, I almost think investors should just give up any hope of seeing profits out of any of these companies this year. Consider: If Curaleaf's sales are slowing, and it's "prioritizing growth and ... market share," then chances are, it's going to be competing on price to achieve that growth and grab that share.


This sounds to me like a recipe for a price war, and a price war in an industry where no one is turning a profit seems likely to torpedo margins for players across the board. Indeed, earlier today, Curaleaf peer Hexo announced that it's closing three production sites "to centralize product cultivation, manufacturing, and distribution at its core facilities," and presumably to cut costs as it weathers the coming storm.

Marijuana investors who booked profits on Monday's stock price rally and cashed out today may be making the right call.
 

Perisher

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Cura was $12~ when thread started
Now 13.24 CAD+1.34 (11.31%)today

Trulieve was $35~
Now 38.75 CAD+2.41 (6.63%)today
 

Perisher

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Had a topsy-turvy day.

Trulieve hits 43.75 before dropping big to 38.50 CAD−0.25 (0.65%) today
Curaleaf hits 14.22 before dropping big to 12.65 CAD−0.59 (4.46%)today
 

Perisher

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After the recent red sea in the overall market, Cannabis stocks are even cheaper.

Market Summary

Trulieve Cannabis Corp
37.00 CAD
−0.40 (1.07%)today

Market Summary
>
Curaleaf Holdings Inc
12.61 CAD
−0.010 (0.079%)today
 

d9_lives

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After the recent red sea in the overall market, Cannabis stocks are even cheaper.

Market Summary

Trulieve Cannabis Corp
37.00 CAD
−0.40 (1.07%)today

Market Summary
>
Curaleaf Holdings Inc
12.61 CAD
−0.010 (0.079%)today

TLRY all the way.
 
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