2024-04-28 20:08:26 ET
Best Performing Marijuana Stocks to Consider Now
As we approach May 2024, the cannabis industry in the United States continues to evolve, presenting lucrative opportunities for investors. In recent months, several key players in the marijuana stock market have seen remarkable performances. Notably, Trulieve Cannabis Corp. and Glass House Brands Inc. have emerged as top performers. This surge is attributed mainly to increasing legalization and societal acceptance across multiple states. Consequently, these companies have expanded their operations, capitalizing on the growing demand for cannabis products.
Investors interested in capitalizing on the expanding U.S. cannabis market should consider these top-performing stocks. Utilizing technical analysis tools such as moving averages and RSI can provide insights into market trends and timing entry and exit points. Moreover, effective risk management is essential in this volatile market. Strategies such as portfolio diversification and setting strategic stop-loss orders help safeguard investments. Therefore, both novice and seasoned investors can benefit from a well-planned approach to navigating the promising yet unpredictable cannabis sector.
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- Trulieve Cannabis Corp. ( OTC: TCNNF )
- Glass House Brands Inc. ( OTC: GLASF )
Trulieve Cannabis Corp.
Trulieve Cannabis Corp. is one of the leading businesses in the US cannabis industry. The company was established in 2016 to produce medical cannabis products. Their main goal is to deliver top-notch cannabis goods and services. One well-known brand in the cannabis industry is Trulieve. Trulieve plans to operate more than 160 dispensaries nationwide by the end of 2023. They initially surfaced in the state of Florida. They have also spread into many other states. Connecticut, Massachusetts, and California are a few of them. Their quick expansion is proof of their dedication to usability and quality.
The fundamental idea of Trulieve’s business concept is vertical integration. Everything is managed by this method, from agriculture to retail. It promises consistency and top-notch results. They supply a large selection of goods to satisfy various medicinal cannabis requirements. They sell meals, concentrates, flowers, and topical applications. Trulieve’s commitment to patient education and community involvement is astounding. They actively participate in community events and educational initiatives. This interaction improves consumer loyalty and strengthens the brand. Their approach is a great illustration of how to blend social responsibility with business acumen.
Q4 2023 Financial and Operational Highlights
95% of Trulieve Cannabis Corp.’s Q4 2023 revenue came from retail sales, which amounted to $287 million, a 4% sequential rise in revenue. The company reported a $33 million net loss, but it actually turned a $154 million profit or a GAAP gross margin of 54%. The $23 million adjusted net loss was calculated after accounting for non-recurring costs and other exclusions. The quarter’s cash flow was notable, with $122 million in free cash flow and $131 million from operations. EBITDA was $73 million, or 25% of revenue, and adjusted EBITDA was $88 million, or 31% of revenue, due to robust consumer demand and holiday sales. These numbers show how successful the business has been.
Retail sales accounted for 96% of Trulieve’s $1.13 billion in revenue for the 2023 fiscal year. The company maintained a GAAP gross margin of 52% with a gross profit of $589 million despite a reported net loss of $527 million. Additionally, it was able to reduce SG&A spending by $61 million compared to the previous year. The $70 million adjusted net loss does not include a number of expenses and impairments. Operational cash flow was strong at $202 million, and free cash flow was $161 million. Adjusted EBITDA was $322 million, or 29% of revenue. Trulieve also focused on expanding its market presence, launching adult-use sales in Connecticut and Maryland, and increasing its retail footprint to 192 locations by year-end. Recent developments include the addition of two executives and the operation of 193 retail dispensaries nationwide.
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Glass House Brands Inc.
Glass House Brands is a key player in the United States cannabis sector, producing, distributing, and cultivating high-quality cannabis. One well-known vertically integrated company that prioritizes eco-friendly products is Glass House Brands. Its main office is located in California. The well-established cannabis sector in California has made them well-known due to their size and potential for growth. Retailer Glass House Brands has launched many outlets as part of a planned expansion to strengthen its position in the state.
Glass House Brands distributes high-quality cannabis products in response to California’s expanding demand for the drug for both recreational and medical use. They differentiate themselves from the competition by their dedication to sustainable and ecologically friendly farming practices. Investors are drawn to the rapidly expanding cannabis market, in which Glass House Brands is recognized as a major player. California continues to lead the way in cannabis legalization and consumption.
Fourth Quarter 2023 Highlights
For the fourth quarter of 2023, the company reported net revenues of $40.4 million, up 35% from the previous quarter but down 16% from the third quarter of 2022. This result was noteworthy because it exceeded the estimated $38–40 million for the quarter. A key contributor to this achievement was wholesale biomass revenue, which increased by a significant 71% to reach $26.8 million in the same quarter of the previous year. Despite this, there was a 21% sequential reduction from Q3 2023. The fact that this improvement was realized with Greenhouse 6 fully running is noteworthy—this is the second consecutive quarter in which capacity increases were not made in order to compare year over year.
However, the proportion of flower in the volume mix for wholesale biomass sales saw an eight percentage point decrease compared to both the previous quarter and Q4 of the previous year. If the flower mix had remained consistent with Q3, the revenue could have been an impressive $4.0 million higher, boasting an average selling price of $313 per pound, positioning it as the second highest following Q3 2023, and elevating the wholesale biomass gross margin to an impressive 55%.
Retail Revenue Highlights
Retail revenue, on the other hand, decreased to $9.6 million in Q4 2023 from $10.1 million in Q4 2022 and $10.6 million in Q4 2022 due to increased price discounting and a more competitive market. Additionally, sales of wholesale consumer packaged goods (CPG) decreased marginally from $4.3 million to $4.1 million in the previous quarter. The company steadfastly upheld its policy of only supplying to dispensaries that are current on payments, even in the face of a very competitive industry. This cautious strategy prevented notable defaults on accounts receivable, even during some highly publicized store closures.
After reaching a record high of $26.0 million, or 54% of net revenues, in Q3 2023, consolidated gross profit decreased to $18.0 million, or 45% of net revenues. This decline was mainly attributed to a lower mix of flower in wholesale biomass production and sales. Moreover, the quarter witnessed a decrease in gross margin in the retail business and a transition into a loss at the gross margin level for CPG, primarily due to $1.9 million in inventory write-offs, more than half of which was associated with the discontinuation of the FIELD and Forbidden Flowers brands.
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Top Marijuana Stocks Dominating the Market
Over the last six months, certain marijuana stocks have shown exceptional performance, making them key players to watch before May 2024. Among these, Trulieve Cannabis Corp. stands out due to its robust growth in the highly competitive U.S. market. As states continue to legalize marijuana at various levels, Trulieve has expanded its footprint effectively. This expansion strategy has paid off, as reflected in their consistently rising stock value. Similarly, Glass House Brands Inc. has also demonstrated significant growth. This company’s focus on sustainable cultivation practices has uniquely positioned it within the eco-conscious consumer segment.
Looking ahead, the U.S. cannabis industry appears poised for substantial growth. Analysts predict a continued upward trajectory fueled by legislative advancements and increasing social acceptance. Consequently, investors are keenly interested in this sector. Technical analysis, such as trend lines and volume indicators, can help identify potential investment opportunities. However, it is crucial to incorporate proper risk management strategies. This approach should include diversification and setting stop-loss orders to mitigate potential losses. By doing so, investors can better navigate the uncertainties of this burgeoning market.
