Columbia Care (OTC:CCHWF), Ascend Wellness Holdings (OTC:AAWH) and Village Farms International (NASDAQ:VFF) all have had double-digit revenue growth so far this year. Still, all three cannabis companies, all of whom have market caps around or below…
$1 billion, are flying under the radar, with their shares languishing this year.
It has been a rough year for cannabis stocks. The Cannabis ETF, for example, is down more than 44% for the year. The excitement over the opening of cannabis sales in several states has dulled, as the pace of new cannabis legislation at the federal and state level has been sluggish.
Here’s why I think these three overlooked stocks have great potential in 2022.
Columbia Care is in a good spot
Columbia Care is on pace for a record revenue year, but you wouldn’t know it from where the stock is at, down more than 48% for the year.
The company, with a market cap of $1.118 billion, reported revenue of $132.3 million in the third quarter, up 144% year over year and 21% sequentially. It has issued yearly guidance of $470 million to $485 million in revenue, which represents a range of 137% to 145% above 2020’s revenue of $197.9 million. The company also reported record adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $31 million, an increase of 634% over 2020 and 89% sequentially.
The other big deal for Columbia Care is it is in a good position to benefit when several Northeastern states open to recreational sales, particularly New York, New Jersey, and Virginia.
Columbia Care has 79 retail outlets, with 20 more in development. New York is expected to open up to recreational sales sometime next fall, and the state has the potential to be a $5 billion cannabis market, the company said.
Columbia Care opened the first medical marijuana dispensary in New York and already has eight medical retail locations in the state, four of which are active, in addition to two large production facilities in Rochester and Riverhead.
In Virginia, which could open to recreational cannabis sales in 2023, Columbia Care has licenses for 12 retail outlets. And in New Jersey, which is expected to open for recreational sales in February, Columbia Care has licenses for six retail outlets.
Ascend Wellness is also counting on the Northeast
Ascend Wellness just went public last spring and has seen its shares tumble more than 36% this year. Like Columbia Care, Ascend isn’t profitable yet but shows an improved balance sheet.
In the third quarter, the marijuana company reported revenue of $94.4 million, up 128% year over year and 13.2% sequentially. It gave guidance for full-year revenue of $350 million, which would represent 130% growth over 2021. It also showed adjusted EBITDA of $23.5 million in the quarter, a 15.9% increase over the prior quarter.
Ascend has a market cap of $1.052 billion and 19 retail locations, spread across five limited-license states: Illinois, Michigan, New Jersey, Massachusetts, and Ohio.
It also has a deal in the works with MedMen (OTC:MMNFF) to acquire that company’s New York license, along with…
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