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2 stocks of cannabis that will benefit from legalization in New York; The analyst says “buy”
Sometimes popular sentiment fuels a market boom, and nowhere is this more evident than in the legal marijuana industry. However, cannabis remains illegal in the United States at the federal level, making the various state-level legalization regimes a patchwork of disconnected policies. Still, there is hope that the current Congress will pursue a federal legalization bill – but before that happens, investors are watching to see which state (s) will pass full legalization next. And at the top of that list is New York. BTIG analyst Camilo Lyon has been following the marijuana legalization movement in New York City and sees positive developments down the road. “Currently we are modeling adult use sales in New York to start in 4Q22, however, given the pace and direction of cannabis reform given by the state legislature, we may see our sales schedule for legal adult use go to 1T22. would increase our New York market revenue assumption to $ 749 million, from $ 187 million, an increase of $ 562 million. More importantly, we estimate 2023 sales to grow to $ 3.8 billion in recreational sales, $ 2.8 billion more than our current timeline suggests. Lyon was of the opinion. To this end, Lyon selected two cannabis stocks which have already established a presence in New York State and which could increase by more than 60% in the coming year. After running the two tickers in the TipRanks database, we discovered that the rest of the street is on board as well, as each sports a “Strong Buy” consensus rating. Curaleaf (CURLF) We’re going to start by going big, and watch Curaleaf. This company’s market capitalization of $ 10.9 billion and annual revenues of $ 670 million make it the largest cannabis company in the world. Curaleaf has a broad reach, with its headquarters in Massachusetts and operations in 23 states. These operations include 23 grow facilities, 30 treatment facilities, 101 dispensaries and more than 1,800 wholesale dispensary accounts. Even though the US cannabis market is fragmented, Curaleaf has posted revenues in as much as possible. Consistent growth and year over year earnings in each quarter of 2020. Starting at $ 104 million in the first quarter, the company reached $ 240.4 million in fourth quarter sales, representing 201% gain from one year to the next (year on year). This was due to a 242% year-on-year gain in quarterly retail sales, which reached $ 164.9 million, and a whopping 578% year-on-year gain in retail sales. wholesale trade, which amounted to $ 64.4 million. New York State represents only a small portion of Curaleaf’s total business. In accordance with current state regulations, Curaleaf has a maximum of 1 grow / process facility in New York City, as well as 4 dispensary licenses, all of which operate for the medical cannabis market. Still, it gives Curaleaf an established footprint from which to grow if the state legalizes recreational use. In its cover of this headline, Lyon from BTIG writes: “We believe that CURA’s diverse geographic footprint will be the main growth driver supporting annual sales growth of 87% for the next two years…. Importantly, we believe that CURA turned into positive free cash flow last year and will continue to generate enough FCF over the next two years to fund investments in its vast footprint of 23 states. To that end, Lyon gives Curaleaf a buy rating, and its price target, at CAN $ 35 (US $ 28), suggests a 75% hike for the coming year. (To view Lyon’s record, click here) Wall Street appears to agree with Lyon’s bullish call on this stock, as shown by the unanimous Strong Buy consensus rating based on 9 Buy ratings. The stock is selling for US $ 15.99 and its average price target of US $ 22.26 suggests there could be 39% growth by the end of the year. (See Curaleaf’s market analysis on TipRanks) Green Thumb (GTBIF) Next up is Green Thumb, a Chicago-based medical and consumer marijuana company with a network of facilities in 12 US states. These facilities include 13 manufacturing plants and 97 retail outlets. The company’s retail products include edibles, pre-rolled cannabis vapes and cigarettes, as well as CBD wellness items for the home health market. Like Curaleaf above, Green Thumb has a footprint in New York City, within that state’s regulatory limits. The activities include three dispensary licenses, but no cultivation facilities. The company, however, has already experienced the transition from a medical-only operation to a recreational model in the state of Illinois, and therefore has an organizational model should New York make a legal change. similar. Green Thumb released fourth quarter numbers on Wednesday, offering higher than expected growth. Specifically, revenue rose 13% from TQ to $ 177.2 million, beating the consensus estimate of $ 166.7 million. EBITDA was also better than expected, increasing 23% to $ 65.4 million, compared to the street estimate of $ 58.3 million. Camilo Lyon covers Green Thumb and writes about the company and its prospects in New York: “Local news reported in January that [Green Thumb] may be planning to build a distribution facility in Warwick, New York (about 50 miles north of Manhattan). According to reports, the distribution facility consists of three buildings, two of 100,000 square feet and one of 200,000 square feet at Warwick Technology Park. This news is particularly important as we believe NY may legalize adult use as early as this year, and [Green Thumb] investing in new distribution capacity before legalization should give it an edge in meeting what is expected to be an overwhelming demand from recreational customers. To that end, the analyst assigns a buy rating to this stock, and its C $ 73 (price target of US $ 58 suggests a potential upside of 69% year over year. Lyon, click here) Overall, Green Thumb has 8 buy notices, totaling unanimous Strong Buy consensus rating. The stock is selling for $ 34.49, and its average price target of $ 47 implies a rise 36% year over year from that level. (See Green Thumb stock analysis on TipRanks) Ideas for cannabis stocks traded at attractive valuations, visit the best stocks to buy from TipRanks, a tool newly launched which brings together all information about the shares of TipRanks. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended for informational use only. It is very important to do your own analysis before making any investment.
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