2022 could be a decisive year for the cannabis sector and undervalued marijuana stocks that have been under pressure. An increasing number of Americans support the legalization of marijuana. At present…
about 20 states have fully legalized both medical and recreational use. At the federal level, though, it remains a Schedule I substance and is illegal.
That said, Grand View Research estimates that the global legal marijuana market could expand at a compound annual growth rate (CAGR) of more than 25% between 2022 and 2030. So, against this backdrop, investors are focused on searching for undervalued cannabis stocks to buy before they heat up.
Many cannabis stocks have suffered significant declines in recent months. For example, the AdvisorShares Pure U.S. Cannabis ETF (NYSEARCA:MSOS) — one of the largest and most liquid cannabis ETF — has declined 37% year-to-date (YTD).
However, analysts anticipate a recovery in the cannabis industry due to improving profitability. In addition, expanding revenue growth will help these companies self-finance further growth. That development would be a critical competitive advantage given that cultivators struggle to gain access to loans due to federal regulations.
So, with that information, here are three undervalued marijuana stocks that could gain traction in 2022.
Curaleaf Holdings (CURLF)
Curaleaf released Q4 results on March 3. Revenue increased 39% year-over-year (YOY) to $320 million. Meanwhile, adjusted net loss narrowed to $30 million, compared with $37 million a year ago. The companya also ended the year with $299 million in cash and $436 million in outstanding debt.
In March 2021, the company announced the acquisition of EMMAC Life Sciences Group, Europe’s largest independent cannabis company. The acquisition offers exposure to crucial medical cannabis markets in Europe, more than twice the size of the U.S.
Yet, CURLF stock has lost more than 53% of its value over the past year. Shares are also trading at 3.7 times trailing sales. Meanwhile, the 12-month median price forecast for Curaleaf stands at $14.10 per share.
Green Thumb Industries (GTBIF)
Next up is Green Thumb Industries (OTCMKTS:GTBIF), which produces and sells medical and adult-use cannabis products in 15 states. Its consumer-packaged-goods strategy to offer a wide range of premium house brands has improved profit margins and branding equity.
Green Thumb reported Q4 results on March 1. Revenue increased 37% YOY to $244 million. Net income was 10 cents per diluted share, down from 11 cents in the prior-year quarter. Furthermore, cash and equivalents ended the year at $230 million.
The marijuana company boasts solid fundamentals, delivering positive net income for six quarters in a row. It enjoys increased traffic at its 76 dispensaries and is now focusing its expansion on limited license states with large populations.
Despite positive developments, GTBIF stock has dropped 33% YTD. Shares are trading at 29 times forward earnings and 4 times trailing sales. At present…
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