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2 “Strong Buy” cannabis stocks showing monster growth
Investors have focused on growing companies over the past year, and one of the growing segments is the young cannabis industry. The sector offers a unique proposition and the prospect of further growth, as there is still a major catalyst on the horizon that will completely change the industry. As expected, a Democratic-led Senate has been good news for those pushing for marijuana reform at the federal level; And it looks like the planned changes could happen faster than initially expected. Backed by Senate Majority Leader Chuck Schumer, Democratic Senators said they would push for the legalization of marijuana at the federal level, promising “a draft unified discussion on [cannabis] reform ”in the first half of this year. The statement feeds expectations that the Democratic majority in Congress will pass – and President Biden will sign – a bill to legalize marijuana. Investors are also considering further legalization measures at the state level; a key state in this regard is New York. So the cannabis industry is getting better. There is an expanding network of state legalization regimes and expectations of federal policy change; both are putting upward pressure on cannabis shares. Against this background, we used the TipRanks database to find two cannabis stocks that were named as “strong buys” by analyst consensus. Both have shown impressive performances since the start of the year and are expected to increase even more in the coming year. Village Farms International (VFF) We will start with Village Farms International, a company that has long been involved in the niche farming sector. The company started out as a farmer, producing high quality greenhouse vegetables year round for sale in the North American market. This experience suits the company well for a transition to the cannabis industry – Village Farms has experience in greenhouse production and cultivation on an industrial scale. Village Farms shares have a formidable growth profile, up 327% in the past 12 months – with a strong spike in recent days. Two major news items have precipitated the surge since the end of January. First, the company has paid off in full – sooner than expected – the $ 15 million debt it incurred when it acquired cannabis cultivation company Pure Sunfarms in November. And second, Village Farms increased its investment in Asian cannabinoid company Altum by 50%, to hold a 10% stake in the business. This move increases the international reach of Village Farms and its ability to expand Altum’s operations in the future. The company was able to fund these moves because it successfully completed a stock sale in January, putting an additional 10.8 million shares on the market and raising US $ 135 million in new capital. In addition to its strong capital and expansion positions, Village Farms reported strong financial results. The company achieved a turnover of 43 million US dollars in 3Q20, a gain of 12.5% year-on-year. EPS was 1 cent per share, a turnaround from the loss of US $ 0.10 in the quarter last year. Covering Village Farms for Craig-Hallum, 5-star analyst Eric Des Lauriers writes: “Village Farms has clearly established itself as the leading cannabis producer in Canada with number one brand share and top notch profitability. Cannabis sales in Canada from 2020 to October (latest data available) increased 128% year-on-year, and the number of dispensaries is expected to accelerate through 2021, providing a favorable wind for VAW revenues. Regarding the US markets and VFF’s position in Canada’s largest neighbor, the analyst adds, “With 5.7 million square feet of greenhouses in Texas, the company also has a real US option, which is finally appreciated by investors after the election of the GA. . VFF has historically been undervalued relative to its less profitable peers, but we expect stocks to continue to perform higher… as the outlook for US reform increases throughout the year. To that end, Des Lauriers values VFF a buy, and its price target of $ 25 suggests the stock has a margin upside of around 26% in the coming year. (To view Des Lauriers’ balance sheet, click here) Overall, there are 3 recent reviews of VFF stocks, and all of them are buyouts, giving the stock a Strong Buy analyst consensus rating and showing a general agreement on Wall Street on the strengths of society. The shares are priced at $ 19.90, and the average price target of $ 24.33 implies an increase of about 23% for the coming year. (See VFF’s stock analysis on TipRanks) TerrAscend Corporation (TRSSF) The next cannabis stock we are looking at, TerrAscend, is another big cannabis producer in the United States, Canada and Europe. The company is involved in both the medical and recreational aspects of the market, it cultivates and produces cannabis and markets a range of products under many brands. TerrAscend’s U.S. operations are located in California, Pennsylvania, New Jersey, and Utah, and the company seeks to grow as more states legalize cannabis. A strong sign of the strength of the cannabis industry, shares of TRSSF have climbed 624% in the past 12 months. Growth was fueled by expanding cultivation operations in California and Pennsylvania, and entry into the adult recreational market in New Jersey. Last month, TerrAscend closed a non-brokered private placement share sale, putting more than 18 million common shares on the market. The sale price was C $ 12.35 (US $ 9.72) and the placement brought in C $ 224 million (US $ 176.3 million). The bulk of the product – about 80% of the total – was set up by four large US institutional investors. The funds raised will be used to continue the expansion of the company’s cultivation activities (TRSSF plans to expand growth and manufacturing operations in New Jersey), as well as to continue merger and acquisition activities. TerrAscend’s rapid growth and strong future prospects have caught the attention of top-rated analysts, including 5-star analyst Eric Des Lauriers of Craig-Hallum (mentioned above). “TerrAscend is a leading multi-state operator (MSO) in the US cannabis market with industry-leading management, assets and transaction flow access.” We have been bullish on the business since the cover launch last year and are happy to say that the TRSSF team has exceeded our expectations, generating rapid increases in margins and operating leverage that have earned it a solid place in the MSO Top Tier, ”noted Des Lauriers. The analyst summed up: “[With] Over US $ 280 million raised since the election and federal reform faster than expected, we believe TRSSF deserves a bounty for its peers. “Consistent with his bullish comments, Des Lauriers rates TRSSF shares at around 31% upside potential for the next 12 months. Once again, we are looking at a stock with broad agreement from Wall Street analysts – the note Consensus Strong Buy is unanimous, based on 7 recent reviews. The shares are selling at $ 15.30 and their recent appreciation has pushed that price almost to the average price target of $ 15.43 (see TRSSF stock market analysis on TipRanks) All information about the equity of TipRanks. Disclaimer: Opinions expressed in this article are those of featured analysts only. Content is intended to be used for informational purposes only It is very important to do your own analysis before any investment.
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