In the still-nascent cannabis industry, a lack of cash flow for a company can often lead to a lot of frustration for investors. Cash-strapped businesses often issue shares just to help finance their operations, leaving existing shares worth less, and the stock price ends up falling. Sales growth and positive adjusted EBITDA can help a company attract attention, but if it’s not generating positive cash flow from its operations, it may not be a great investment…
However, four cannabis producers are having no trouble producing cash flow: Curaleaf (OTC:CURLF), Green Thumb Industries (OTC:GTBIF), Trulieve Cannabis (OTC:TCNNF), and Village Farms International (NASDAQ:VFF). Each has posted some great results over the past year, and they’re among the safest pot stocks you can invest in today.
Investors undoubtedly love Curaleaf for the incredible growth numbers the company has been generating. In 2020, sales of $627 million were nearly triple the $221 million it reported in the previous year. Acquisitions and organic growth have been fueling the business, along with new opportunities opening up as a result of more states legalizing marijuana.
But what is also impressive is that Curaleaf is achieving this growth while also posting an adjusted EBITDA profit of $144 million and positive operating cash flow of $12 million. That isn’t a boatload of cash, and the company may still need to issue shares to fund its aggressive growth strategy, but it will be a whole lot less than if it were bleeding money from its day-to-day operations. The strong numbers all around help explain how Curaleaf’s stock has produced gains of 252% over the past year, which is well above the Horizons Marijuana Life Sciences ETF‘s returns of 84%.
2. Green Thumb
Green Thumb is focused more on consumer packaged goods, and that strategy has been working just fine for its business. Last year, sales of $557 million more than doubled the prior-year tally of $216 million. And although its 157% growth rate wasn’t as impressive as Curaleaf’s 184%, the company’s operating cash flow of $96 million was much stronger. It even generated free cash flow of $36 million.
With such strong cash flow, Green Thumb is in a solid position to take on acquisitions and more expansion in the coming year without needing to dilute its shareholders. It has been busy expanding into multiple states, including New Jersey, which recently legalized recreational marijuana. Over the past 12 months, the stock has risen by 380%.
Trulieve has brought in even more cash from its day-to-day operations than Green Thumb, generating $100 million in cash last year. With investments in plants, property, and equipment totaling $141 million, its free cash remains negative. But the company has been putting that money to good use in expanding its operations. Its 75 stores as of the end of 2020 is a 70% increase from the 44 it had at the end of 2019.
Its sales of $522 million in 2020 doubled last year’s total of $253 million. Its growth rate was the…
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