Better Marijuana Stock: Jushi Holdings vs. Cresco Labs

Cresco Labs (OTC:CRLBF) and Jushi Holdings (OTC:JUSHF) have rewarded investors handsomely over the past year. Cresco’s stock is up more than 176% over the past 12 months while Jushi’s is up more than 436% in the same period.

While the market, in general, has been off to a strong start in the first half of the year, both of these stocks have seen a pullback over the past three months, with Cresco down more than 13% and Jushi down more than 14% in that period. I see this as a potential buying opportunity, though, as both cannabis companies continue to show improving financial data.

To determine the better stock for right now, we need to examine which stock is less of a risk, has more likely growth, and is overall the better deal.

The case for Cresco Labs

Chicago-based Cresco is certainly the bigger cannabis company of the two, with $178.4 million in revenue in the first quarter, more than four times the $41.7 million that Jushi brought in. While bigger isn’t always better, it certainly helps in cannabis. More revenue means more possibilities for expansion, whether by opening new dispensaries or though acquisitions. We’re still in the early years of cannabis, but it makes sense that the taller plants — to twist a metaphor — will get more of the sunshine, rain, and market share.

Cresco, founded in 2013, is already firmly established as the biggest cannabis company in Illinois, which is one of the sector’s most profitable states so far. It has a total of 32 dispensaries — with licenses for 44 — across 10 states. It is focusing most of its efforts on states where there are limited licenses, such as Illinois (where it has 10 dispensaries), New York (where it has four), Ohio (where it already has the state’s maximum of five), and Pennsylvania, (where it has four). It was the first cannabis company to be operational in Ohio and Pennsylvania.

What truly sets Cresco apart, however, is its strong wholesale revenue. The company has focused on its brands, and that decision has paid off. Management said in the quarter that it pulled in $95.6 million of its revenue from its wholesale segment, an increase of 150.8% year over year and more than 5.7% sequentially. The wholesale side gives Cresco an upper hand when it does open up in a state — its brands are already familiar because they are sold in 700 dispensaries across the country.

Few cannabis companies are consistently profitable, but Cresco appears to be headed in that direction. Though it lost $24.1 million in the first quarter, it reported $34.9 million in adjusted EBITDA, its eighth consecutive quarter of positive adjusted EBITDA.

The case for Jushi Holdings

Jushi Holdings, based in Boca Raton, Fla., is all about revenue growth. The company reported yearly revenue of $80.8 million in 2020, up 689.6% year over year. The company isn’t profitable, but it’s certainly headed that way, with an adjusted EBITDA loss of $3 million in the quarter compared with a $28 million loss the year prior.

The company’s first-quarter numbers — which came in late, a slight concern that the company blamed on its auditor MNP  — showed continued… Continue reading at