According to Fortune Business Insights, the global cannabis market is poised to grow at a CAGR rate of 32.04% between 2021 and 2028, reaching $197.74 billion in the terminal year. Increasing cannabis legalization pace…
around the world should support this fast-growing industry.
The cannabis market has experienced massive fluctuations in 2021 due to investors’ concerns regarding completion and profitability. As a result, the ETFMG Alternative Harvest ETF (MJ) started the year on a high note and rose to as high as $34.58, but it gave back those gains since then, plunging 20% year-to-date (YTD). Hence, contrarian investors have an opportunity to scoop up cannabis stocks on the dip.
With this in mind, I am going to analyze two promising cannabis stocks: Green Thumb Industries Inc. (GTBIF – Get Rating) and Verano Holdings Corp. (VRNOF – Get Rating), which Wall Street analysts expect to double in 2022.
Green Thumb Industries Inc.
Green Thumb Industries, which is based in Chicago, Illinois, produces, markets, and sells a variety of cannabis-related products in the US.
YTD, shares of Green Thumb Industries are down 14%.
Recent Quarterly Performance
On November 10th, Green Thumb Industries announced its third-quarter earnings results. Its total revenue increased 48.7% year-over-year to $233.68 million in Q3, beating Wall Street estimates by $1.3 million. Also, GTBIF reported GAAP EPS of $0.08, slightly missing expectations by $0.02.
Green Thumb’s net income rose 110.42% to $20.2 million from its year-ago value of $9.6 million. The company’s Adjusted Operating EBITDA came in 52.6% higher year-over-year at $81.2 million.
Green Thumb ended the third quarter with cash on hand of $285.8 million. What is more, the company reported a seventh consecutive quarter of positive cash flow from operations, generating $82.8 million YTD. Consequently, there’s no need for additional funding at the moment.
Analysts’ Estimates & Valuation
Wall Street expects GTBIF’s earnings to decrease by 25% in the fourth quarter of 2021 to $0.08 per share. However, its Q4 sales should increase 34.77% to $238.85 million. Also, its bottom and top line are estimated to increase 358.44% and 59.85% to $0.32 and $889.66 million in FY2021, respectively.
When it comes to Forward P/S, the stock’s 5.51x is 20.87% lower than the 6.96x sector median. Also, the company’s FWD EV/EBITDA multiple of 15.39x trades with a small discount compared to the sector’s median of 15.84x.
Wall Street analysts have rated GTBIF as a “Strong Buy”, establishing an average price target of $49.36.
Verano Holdings Corp.
Founded in 2017, Verano Holdings Corp. is a vertically-integrated cannabis company that produces and sells its cannabis products in the United States.
Over the past sixth month, shares of Green Thumb Industries have fallen about 26%.
On December 28th, the…
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