Huge margins and a rapidly expanding total addressable market (TAM). That’s the answer. It’s just about all you need to know as far as why taking a good hard look at cannabis stocks may make sense for investors.
In terms of margins and relative change in TAM over time through shifts in the legislative landscape, there’s no other market space that offers the same powerful opportunity in the years ahead according to analysts and growth managers.
The stocks in the space took a huge hit into what suggests itself as a possible cycle low in an ongoing structural expansion, and the problems are the balance sheets of the former leaders, which has tainted perception of the space. But ACB, TLRY, CGC, and their ilk don’t really reflect the broad dynamics in play, which may set the stage for a powerful period ahead for the leaner, meaner names in the space.
And a looming election that promises to expand the TAM further through more state legalizations has the ability to act as a big catalyst ahead.
As such, we put together a list of some interesting stocks in the space that could represent strong opportunities for speculators over the coming period, including: Trulieve Cannabis Corp (OTCMKTS:TCNNF), GrowGeneration Corp (NASDAQ:GRWG), Sugarmade Inc (OTCMKTS:SGMD), and Curaleaf Holdings Inc (OTCMKTS:CURLF).
Trulieve Cannabis Corp (OTCMKTS:TCNNF) engages in the cultivation, possession, distribution, and sale of medical cannabis in the United States. It offers a suite of Trulieve branded products with approximately 125 SKUs, including nasal sprays, capsules, concentrates, syringes, and cannabis flower in tamper-proof containers for vaporizers, topical creams, tinctures, and vape cartridges.
According to company materials, Trulieve is a vertically integrated “seed to sale” company and is the first and largest fully licensed medical cannabis company in the State of Florida. Trulieve cultivates and produces all of its products in-house and distributes those products to Trulieve branded stores (dispensaries) throughout the State of Florida, as well as directly to patients via home delivery.
Trulieve Cannabis Corp (OTCMKTS:TCNNF) just announced the launch of two new flavors to the TruPowder line: Vanilla Cream and Lemon. The TruPowder flavors will be available in all dispensaries across Florida starting today. TruPowder is a Nano-encapsulated Cannabinoid powder. Using cutting edge and state of the art technology TruPowder uses sound waves (sonication) to achieve incredibly small nano-sized Cannabinoids which are then encapsulated.
“Trulieve is excited to be launching our newest flavors of Vanilla Cream and Lemon to our TruPowder line. We are focused on delivering an exceptional and differentiated customer experience, and that includes offering the broadest selection of high-quality cannabis products,” said Trulieve CMO Valda Coryat. “Trulieve continues to be the leading source for both quality and accessibility, and were first to offer ingestible products in the state of Florida. With our newest TruPowder flavors, that will further extend our variety of cannabis offerings for Florida patients.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. TCNNF shares have been moving higher over the past week overall, pushing about 7% to the upside on above average trading volume.
Trulieve Cannabis Corp (OTCMKTS:TCNNF) pulled in sales of $167.3M in its last reported quarterly financials, representing top line growth of 115.9%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($204.7M against $136.3M).
GrowGeneration Corp (OTCMKTS:GRWG) owns and operates retail hydroponic and organic gardening stores in the United States.
Currently, GrowGen has 27 stores, which include 5 locations in Colorado, 5 locations in California, 2 locations in Nevada, 1 location in Washington, 4 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 1 location in Oregon, 3 locations in Maine and 1 location in Florida. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers.
GrowGeneration Corp (OTCMKTS:GRWG) just announced that it believes it has uncovered fraudulent attempts to manipulate the Company’s stock.
On August 21, 2020, an organization calling itself “Hindenburg Research” published false and defamatory statements about certain Officers and Directors of the Company designed to provide a false impression to investors and to manipulate the market to benefit short sellers. According to the release, GrowGen intends to collaborate with law enforcement and regulators to ensure that any criminal activity is investigated and prosecuted. GrowGen will be taking steps to ensure that the organization ceases and desists from all illegal and otherwise wrongful activity. GrowGen will vigorously defend the value of the Company on behalf of shareholders and investors.
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 6% in that timeframe. GRWG shares have been relatively flat over the past month of action, with very little net movement during that period.
GrowGeneration Corp (OTCMKTS:GRWG) managed to rope in revenues totaling $43.5M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 123%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($14.8M against $18.8M, respectively).
Sugarmade Inc (OTCMKTS:SGMD) operates in an expanding context broadly in the cannabis space, with a major stake and operational control in California cannabis delivery service, BudCars, representing a major part of the company’s strategic outlook.
Sugarmade’s BudCars model has been feasting on increasing market share during the pandemic for obvious reasons: cannabis consumers can order their favorite products and have them delivered right to the door in touchless convenience. That dynamic has presented SGMD shareholders with a dramatic boom over recent months.
Sugarmade Inc (OTCMKTS:SGMD), to further drive expansion for its shareholders, recently powered into the domain of verticalization and cultivation with its announcement of a lease agreement to take over a property where it plans to set up and operate a licensed cannabis cultivation business capable of producing as much as 3.6 million grams of high-quality cannabis flower per year in Northern California.
According to the release, the Company intends to market the cannabis through various distributors as both white-label and branded cannabis products, including through BudCars. The process of obtaining cannabis cultivation licensing for the Property has commenced, with the Company now preparing archaeological and biological surveys and assembling documentation related to the architectural and engineering plans for construction of greenhouses and a processing building. The full package has yet to be submitted, but management is in close communication with the County and County representatives have been very helpful with the process.
Jimmy Chan, Sugarmade’s CEO, commented, “We believe we have all of the strategic pieces in place to capitalize on cultivation, with the market currently chronically undersupplied. We also have relationships in place, especially through our BudCars investment, to hit the ground running on the branded products side, driving strong margins up and down the chain.”
Sugarmade Inc (OTCMKTS:SGMD) has been posting major growth updates on a regular basis over the past couple months as its BudCars model takes apparent flight. The rate of sales growth expected from the company in 2020 has walked up a steep ladder, with the latest guidance suggesting we could see it north of $30 million in annualized sales by year-end.
Curaleaf Holdings Inc (OTCMKTS:CURLF) operates as an integrated medical and wellness cannabis operator in the United States. Curaleaf Inc.’s Florida operations were the first in the cannabis industry to receive the Safe Quality Food certification under the Global Food Safety Initiative, setting a new standard of excellence.
It cultivates, processes, markets, and/or dispenses a range of cannabis products in various operating markets, including flower, pre-rolls and flower pods, dry-herb vaporizer cartridges, concentrates for vaporizing, concentrates for dabbing, tinctures, lozenges, capsules, and edibles. The company also provides non-cannabis services to licensed cannabis operators in the areas of cultivation, extraction and production, and retail operations.
Curaleaf Holdings Inc (OTCMKTS:CURLF) recently announced the grand opening of Curaleaf Brandon, the company’s 31st location in Florida. The new location, located at 846 E. Brandon Blvd, is the third new dispensary in the Tampa / St. Petersburg / Clearwater metropolitan area this quarter.
Curaleaf is committed to serving the growing base of 394,000 registered medical patients in Florida, which is one of the nation’s fastest-growing medical cannabis markets in the country. In August, the company opened new dispensaries in Clearwater (2081 Gulf to Bay Blvd.) and South Tampa (3030 W. Gandy Blvd.). The company’s strategic expansion in the Tampa Bay area will provide patients and caregivers expanded access to high-quality medical cannabis products, including Select, America’s #1 cannabis oil brand.
And the stock has been acting well over recent days, up something like 6% in that time. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -7%.
Curaleaf Holdings Inc (OTCMKTS:CURLF) pulled in sales of $162.8M in its last reported quarterly financials, representing top line growth of 150.9%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($167.2M against $176.4M, respectively).
COMPENSATION DISCLOSURE: Section 17(b) of the 1933 Act requires publishers to disclose who paid them, the amount, and the type of payment. In order to be in full compliance with the Securities Act of 1933, Section 17(b): Tiger Global Management Partners LLC has compensated a third party to produce and present weekly content for various companies for the publication. For more information, please click here. In addition, this article is part of JournalTranscript.com Networks. Read the JournalTranscript.com Networks Disclaimer.