The cannabis market has been on a rollercoaster ride over the past few years, and with so many ups and downs, it’s hard to keep up. However, one company is still consistently delivering amazing growth: Canopy Growth Corp. How will they continue to grow as more states legalize marijuana?
The “top marijuanas penny stocks 2020” is a company that has been growing at an amazing rate. The stock has increased in value by over 300% in the past year, and they are projected to continue growing in the future.
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One of the most common arguments made by marijuana stock bears is that since the industry’s expectations are already so high, it’s virtually difficult for businesses to fulfill them.
However, this isn’t always the case. Sure, the legal marijuana business has exploded in recent years, and marijuana stocks aren’t cheap. Despite the high expectations, however, some businesses may nevertheless exceed them.
You can understand what I mean by looking into Green Thumb Industries Inc (CNSX:GTII, OTCMKTS:GTBIF).
Green Thumb Industries is a vertically integrated cannabis business based in Chicago that was founded in 2014. It has developed itself as a cannabis consumer packaged products business as well as a retailer throughout the years.
Green Thumb offers six consumer product brands that are marketed in 12 states: “Beboe,” “Dogwalkers,” “Dr. Solomon’s,” “incredibles,” “Rhythm,” and “The Feel Collection.” (Source: Green Thumb Industries Inc, “Investor Presentation: May 2021,” last viewed August 16, 2021.)
Green Thumb has a total of 13 cultivation and manufacturing sites. On the retail side, the business holds 111 retail licenses. It presently has 58 retail outlets in operation.
If you’ve been following the cannabis business, you’ll know that Green Thumb is already one of the top multistate operators with this type of reach. And the value of the property reflects that presence. Green Thumb Industries has a market value of approximately CA$9.0 billion as of this writing.
Simply stated, Green Thumb Industries Inc is a major participant in the marijuana industry.
Because Green Thumb Industries, like many of its peers, is listed on the Canadian Securities Exchange, the company’s market cap is expressed in Canadian dollars. However, since the business trades over the counter under the ticker “GTBIF,” it is extremely simple for US investors to acquire a piece of the action.
As previously said, market participants have high expectations for marijuana stocks, making it more difficult for businesses to succeed.
Green Thumb Industries Inc. had high hopes heading into this earnings season. In the second quarter of 2021, Wall Street forecasted sales of $207.5 million and profits of $0.08 per share for the marijuana business.
To put that in context, Green Thumb Industries’ sales was $119.6 million in the previous quarter, with a net loss of $0.06 per share.
The following are the actual outcomes: Green Thumb had a profit of $0.10 per share on sales of $221.9 million. (Source: Green Thumb Industries Inc, “Green Thumb Industries Reports Second Quarter 2021 Results,” August 11, 2021.)
Simply stated, Wall Street was already anticipating a 73 percent rise in revenues year over year and a shift in the bottom line from a deficit to a significant profit. However, the business was able to outperform that. Its actual sales increased by 85% year over year, and company earned $0.02 more per share in net income than analysts expected.
Of course, a business may announce excellent performance and yet have its stock price plummet as a consequence of the news. After all, many equities are now dealing with “sell the news” behavior as a result of the huge rise over the last year.
Although GTBIF stock hasn’t been especially interesting in recent months, investors were cheered by the company’s last earnings release. Green Thumb Industries shares rose 3.5 percent on the trading day after the publication of its second-quarter earnings.
Stock Chart for Green Thumb Industries Inc (OTCMKTS:GTBIF)
StockCharts.com provided the chart.
One may question whether the year-over-year comparison is skewed since the economy was badly affected by the COVID-19 epidemic and the subsequent lockdowns a year ago. Several businesses were reporting very poor performance at the time.
Green Thumb Industries, on the other hand, can guarantee you that this was not the case. The company’s overall revenue increased by 167.5 percent year over year in the second quarter of 2020, compared to the second quarter of 2019. (Source: Green Thumb Industries Inc, “Green Thumb Industries Reports Second Quarter 2020 Results,” August 12, 2020.)
This basically implies that the business has been generating great growth after strong growth.
That’s why, since the company was trading at less than a third of its current price, I’ve been positive on GTBIF.
There’s more to the company’s headline statistics than meets the eye.
Green Thumb Industries Inc’s Consumer Packaged Goods gross sales increased by 13% sequentially in the second quarter of 2021, due to the company’s increasing scale in manufacturing and distribution of branded goods.
The company’s retail sector sales increased by 15% sequentially, owing to increased traffic at existing shops as well as new store openings.
Comparable sales rose by 34%, owing to a greater number of transactions (based on 42 shops operational for at least 12 months). On a base of 51 shops, comparable sales increased by 7% sequentially.
Furthermore, in the second quarter of 2021, Green Thumb Industries Inc produced $48.3 million in cash flow from operations. This was the company’s sixth straight quarter of positive cash flow.
The business is also well-capitalized. It had $481.6 million in current assets at the end of June, including $359.2 million in cash and cash equivalents. On the other side, its total debt was $197.6 million.
Keep in mind that, despite its meteoric rise in recent years, legal cannabis in the United States is still a very new business.
I wouldn’t be shocked to see Green Thumb Industries Inc’s sales and earnings increase even more if it can maintain its growing pace in tandem with the industry’s development. Green Thumb Industries’ stock price would benefit from this.
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Frequently Asked Questions
What is the fastest growing pot stock?
A: The fastest growing pot stock in the United States is Acreage Holdings.
Will pot stocks continue to grow?
A: Pot stocks are extremely volatile, meaning their prices can fluctuate greatly with little to no warning. It is unclear what will happen in the future when it comes to pot stocks, but for now they seem to be climbing at a steady rate.
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