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Cannabis investors do not lack options with regard to potential marijuana stocks in which to invest. Unfortunately, there are many more bad ones than good ones.
Whether it is to spend a lot of money, to multiply by a lot of deals or not to make a profit, there are many reasons why value investors would want to avoid many marijuana growers.
However, there is one who has separated from the pack recently, and that is Charlotte's Web Holdings (TSX: CWEB). The company has been able to do a lot of things that other cannabis companies have struggled to do, and it is growing while making a profit.
Charlotte's Web recently released its second quarter results, and the company has made significant progress in strengthening its presence in the US market. With 7,871 retailers now selling the company's products, including many national retailers, the company has gained significant benefits as a precursor to the emerging sector.
While businesses like Cover growth Charlotte's Web has already established a strong presence in this market and could become a market leader.
Although US $ 25 million in the second quarter is not significant compared to some of the figures we have seen from companies selling THC-based products, what would matter more to investors is that the company has always been able to record a profit. It was a bit rare in the industry and as investors pay more and more attention, the Charlotte website is a big step ahead of the competition.
In the second quarter, Charlotte's Web posted a profit of 2.2 million US dollars. And although this is down from the US $ 3.7 million recorded the previous year, the profit margin remains very strong at 8.8%.
The company's business model has proven to be sustainable and, in particular with Charlotte's online planning, which is very important for investors, this could help avoid taping into the equity markets to raise additional funds needed to its expansion.
Much growth yet to come
Deanie Elsner, CEO of the company, said in its earnings release: "We expect other major retailers will continue to get involved and we expect an increase in the number of states and sites with our channel partners. existing distribution throughout the year. Kroger is the most recent example since they added four new states to their distribution in July, including Texas, the latest state to approve hemp-based CBD products. "
With a growing hype around the CBD, the Charlotte website is positioning itself for a lot of success in the sector. She recently launched a range of gummy products and a dozen products for pets.
As the industry progresses and removes the barriers, the demand for CBD hemp products will be even stronger. There is a lot of growth in the future, and being able to generate positive cash flow will be more important than ever.
Bottom line
While marijuana companies selling non-hemp products may experience stronger growth in the long term, everyone may wonder how long it will take for the pot to be legalized at the federal level. With hemp, investors can see the market in which it is found today, and there is certainly a lot of enthusiasm in the industry with already many retailers.
Overall, Charlotte's Web is well positioned to become a leader in DBC hemp products and, coupled with a profitable business, could be a good long-term purchase today.
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