Investing in rapidly growing industries is a no-brainer. And if technology stocks aren’t your thing, don’t worry: There’s a (more laid back) alternative. Over the next decade, Cowen Equity Research estimates that the market for cannabis products will grow at a compound annual rate of approximately 20%. That’s significantly faster growth than the entire tobacco market, not to mention the markets for other leisure products like liquor, beer, and wine…
Even amid the ongoing green gold rush, picking the right stocks in the marijuana industry is a bit of a challenge. Many companies aren’t profitable, and quite a few shareholders have lost their shirts when nonexistent earnings have given way to crumbling stock prices. Thankfully, as the industry has started to mature, investors now have a few good options to choose from, so let’s dive in and take a look at three of the leaders.
1. Curaleaf
Curaleaf Holdings (OTC:CURLF) is currently the largest cannabis company in the U.S. by revenue, with $238.8 million in pro forma sales during the fourth quarter of 2020. It’s also one of the fastest-growing companies in the industry, with its latest update reporting year-over-year revenue increasing by 161% and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rising by 456%. In short, Curaleaf is selling cannabis like gangbusters, and it’s becoming significantly more efficient at doing so as time goes by.
Accomplishing this feat takes (at least) three ingredients. First, it conducted eight acquisitions in 2020, giving it a presence in 23 states. At least four of these states already have medicinal marijuana laws that the company expects to give way to full legalization for adult use in the near future, allowing it to compete in both markets. Second, it massively scaled up its number of cultivation sites, doubled the number of cannabis processing sites, and nearly doubled its retail footprint. Finally, Curaleaf is pursuing a vertically integrated model, so it doesn’t fall victim to erratic earnings caused by fluctuations in the price of cannabis like many of its competitors.
In other words, Curaleaf is worth buying right now because its growth is on a roll, and management has taken prudent steps to ensure that it can continue to grow over the next few years.
2. Trulieve
Trulieve Cannabis (OTC:TCNNF) is significantly smaller than Curaleaf, and it only operates in six states, with the majority of its locations concentrated in Florida, where it is the medicinal marijuana market leader. There, it controls a whopping 50% of the market, and management has its eye on Massachusetts, Connecticut, and California next. While its fourth-quarter results are forthcoming, its quarterly revenue grew by more than 90% over the course of 2020.
One of Trulieve’s best qualities is that customers seem to love it; management estimates a…
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