4 Cannabis Stocks Wall Street Analysts Rate 'Strong Buy'

The cannabis industry has been the beneficiary of legalization moves in the U.S. lately. Increasing demand for the therapeutic benefits of cannabis, accelerating legislative headway, and an increase in consumers’ acceptance of innovative cannabis products have been fueling the cannabis market’s growth. The global market for legal marijuana is expected to reach $100 billion by 2027, registering a 19% CAGR. Also, the U.S. cannabis market is projected to reach $115 billion by 2030.

Although restricted access to capital and a stigma surrounding cannabis usage are still concerns, the SAFE Banking Act brings some relief. This bill, which was approved by a voice vote in the lower house as part of the broader National Defense Authorization Act, allows banks to do business with cannabis companies without fear of penalty.

Therefore, we think it could be wise to now add quality cannabis stocks Curaleaf Holdings, Inc. (CURLF), Green Thumb Industries Inc. (GTBIF), Trulieve Cannabis Corp. (TCNNF) and Cresco Labs Inc. (CRLBF) to one’s  watchlist.  Also, Wall Street analysts rated these stocks ‘Strong Buy.’

Click here to check out our Cannabis Industry Report for 2021

Curaleaf Holdings, Inc. (CURLF)

CURLF, which is based in Wakefield, Mass., is a vertically integrated cannabis operator that researches and develops ways to distribute cannabis products. The company operates in two segments: Cannabis Operations; and Non-Cannabis Operations. Through its Curaleaf Hemp brand, the company provides service across the medical and adult-use markets and the cannabidiol (CBD) category.

This month, CURLF and Bernard Noble announced the continued national rollout of the B NOBLE brand to dispensaries in six new states. This partnership is CURLF’s first large-scale brand venture, through which it aims to achieve diversity, inclusion, social equity, and sustainability.

Also this month, CURLF acquired Los Sueños Farms and its related entities in Colorado. This acquisition should strengthen CURLF’s market presence in Colorado and provide the company with a high-quality, efficient, and low-cost biomass supply to serve its wholesale and retail customers in Colorado.

CURLF’s total revenue for the second quarter, ended June 30, 2021, increased 165.8% year-over-year to $312.21 million. The company’s gross profit grew 127.1% from its year-ago value to $184.5 million. Its operating income rose 139.2% from the prior-year quarter to $51.89 million. Also, the company’s cash increased 353.9% for the six months ended June 30, 2021, to $333.79 million.

Analysts expect CURLF’s revenue to increase 105.4% year-over-year to $1.29 billion in its fiscal year 2021. In addition, its EPS is expected to increase at a 20% rate per annum over the next five years. Moreover, the stock has gained 18.8% in price over the past year.

All eight Wall Street analysts that have provided ratings for the stock rated it Buy. Closing the last trading session at $10.95, the average analyst price target of $22.86 represents a 108.8% potential gain.

Green Thumb Industries Inc. (GTBIF)

GTBIF is a cannabis cultivator, dispensary operator, and consumer packaged goods company. The Chicago-based company offers cannabis flowers, edibles, and other cannabis products under the Rythm, Dogwalkers, The Feel Collection, Incredibles, Dr. Solomon's, Beboe, and other brands. In addition, it owns and operates a chain of retail cannabis stores called RISE dispensaries.

This month, GTBIF expanded its retail store, Rise Mundelein, in Illinois to enhance the guest experience. Through this expanded space, the company aims to offer guests and patients an open concept bar for individualized consultations, interactive product displays and pop-up shops, increased points of sale, and additional educational spaces.

During the second quarter, ended June 30, 2021, GTBIF’s revenues increased 85.4% year-over-year to $221.87 million. The company’s gross profit grew 93% from its year-ago value to $122.91 million. Its operating income rose 261.9% from the prior-year quarter to $50.86 million. Also, the company’s EPS came in at $0.1, compared to a $0.06 loss per share in the year-ago quarter.

GTBIF’s revenue is expected to increase 32.5% year-over-year to $1.19 billion in its fiscal year 2022. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Furthermore, its EPS is expected to increase by 84.2% next year. The stock has returned 52% in price gains over the past year.

All seven Wall Street analysts that provided ratings for the stock rated it Buy. The consensus price target of $49.24 represents a 104.4% potential gain from its $24.09 last closing price.

Trulieve Cannabis Corp. (TCNNF)

TCNNF in Quincy, Fla., is a medical-based company that cultivates, produces, and distributes its products to dispensaries throughout Florida. The company offers a range of products, such as flowers, edibles, vaporizer cartridges, concentrates, topicals, capsules, tinctures, dissolvable powders, and nasal sprays. It operated 100 dispensaries, which include 90 locations in Florida, as of August 25, 2021.

This month, TCNNF completed the acquisition of Harvest Health and Recreation Inc. Through this acquisition, TCNNF intends to accelerate its growth and expansion, building scale in retail and distribution in new and existing markets through its hub strategy.

TCNNF’s revenue increased 78.1% year-over-year to $215.1 million for the second quarter, ended June 30, 2021. The company’s gross profit grew 59.7% from its year-ago value to $144.5 million. Its net income rose 116.4% from the prior-year quarter to $40.9 million. Also, the company’s adjusted EBITDA increased 54.6% year-over-year to $94.9 million.

For its fiscal period ending December 2021, analysts expect TCNNF’s revenue to increase 84.6% year-over-year to $962.85 million. The company’s EPS is estimated to grow 91.9% in the current year. The stock has gained 27% in price over the past year.

All five Wall Street analysts that provided ratings for the stock rated it Buy. Closing its last trading session at $27.91, the $62.08 average analyst price target  represents a 122.4% potential upside.

Cresco Labs Inc. (CRLBF)

CRLBF in Chicago is a cannabis operator that manufactures a suite of cannabis extracts and vape products. The company offers a wide range of products, including vape pens, capsules, edibles, sublingual oils. It operates under the brand names: Cresco, High Supply, Good News, Wonder Wellness Co., Remedi, Reserve, Flora Cal, Mindy’s Edibles, and Kiva.

This month, CRLBF acquired Laurel Harvest Labs, LLC, a Pennsylvania Clinical Registrant, for US$80 million. The acquisition should provide the company immediate incremental cultivation capacity, expansion of production capacity, and should also add six additional retail dispensary permits in the state.

For the second quarter, ended June 30, 2021, CRLBF’s revenue increased 122.8% year-over-year to $209.98 million. The company’s gross profit grew 217.7% from its year-ago value to $100.98 million. Its operating income came in at $14.87 million, versus a $20.94 million operating loss in the second quarter of 2020. Also, the company’s net income amounted to $2.65 million, compared to a $41.7 million net loss in the prior-year quarter.

A $845.95 million consensus revenue estimate for its fiscal period ending December 2021 represents an increase of 77.6% year-over-year. Its EPS is expected to increase 93.2% in the current year. The stock has gained 17.1% in price over the past year.

Of the eight Wall Street analysts that provided ratings for the stock, seven rated it Buy. Closing its last trading session at $8.48, the $17.34 average analyst price target represents a 104.4% potential upside.

Click here to check out our Cannabis Industry Report for 2021

CURLF shares were trading at $10.86 per share on Thursday morning, down $0.09 (-0.82%). Year-to-date, CURLF has declined -9.29%, versus a 22.04% rise in the benchmark S&P 500 index during the same period.

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.

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