The nascent recovery in hemp and hemp-related stocks space (cannabis, CBD, hemp, etc) is apparently underway. In our experience, the key to finding the new leadership names for the next leg of a growth boom is about identifying relative strength names as the turn just starts to get underway.
To see who’s not all a part of this list, look at the biggest and most popular names from the last up cycle in the space: Canopy Growth Corp (NYSE:CGC), Aurora Cannabis Inc (NYSE:ACB), and Tilray Inc (NASDAQ:TLRY), among others.
The new leadership is something we will define by those stocks showing tangible signs of growth in a range of markets that are trading above their October lows and are up on a trailing year basis. This is not an exhaustive list, but it contains several very interesting names to have on your radar: Curaleaf Holdings Inc (OTCMKTS:CURLF), Trulieve Cannabis Corp (OTCMKTS:TCNNF), GD Entertainment and Technology (OTCMKTS:GDET), and Green Thumb Industries Inc (OTCMKTS:GTBIF).
Curaleaf Holdings Inc (OTCMKTS:CURLF) is a rapidly growing force in the hemp and hemp-related sector. The company operates a bunch of dispensaries, cultivation sites, and processing operation centers that it prides itself on having positioned in highly populated, limited license states.
The company is a factor in the medical cannabis, recreational cannabis, and CBD spaces. The CBD segment operates through its Curaleaf Hemp brand.
For those who are more familiar with the big board names like TLRY, it may interest you to know that CURLF reported 25% more overall sales than Tilray last quarter.
CURLF shares deserve to be on this relative strength list as the stock is trading well above its levels from October and is clearly up on a trailing year basis – putting it in a very select group given the widespread carnage we have seen in the sector.
Overall, the company pulled in sales of $65 million during its most recently reported quarterly financial data. In addition, the company has a fortress balance sheet, with cash levels far exceeding current liabilities ($140.3M against $64.1M).
To continue its strong momentum, CURLF recently announced it will launch its custom-designed Veterans Cannabis Project pre-roll product in Florida today. According to the release, a portion of all proceeds will benefit the Veterans Cannabis Project (VCP), an organization that advocates for legal and supported access of medical cannabis for veterans through the Department of Veterans Affairs. In Florida the boxes will be available for $26, and each box contains five 0.4 oz pre-rolls for a total of 2 grams per box.
“We are proud to launch the Veterans Cannabis Project initiative in Florida to provide additional support and education for veterans in the communities we serve,” said Pablo Arizmendi-Kalb, President of Curaleaf Florida. “Through this partnership with the Veterans Cannabis Project, we hope to increase awareness for veteran access to medical cannabis.”
Trulieve Cannabis Corp (OTCMKTS:TCNNF) is another name that has earned its way onto this list. Shares of the stock are rocketing higher in recent action, up over 60% in the past 6 weeks, and solidly up on a trailing year basis.
Helping to foster that successful narrative, the company just announced that it opened the doors of its latest Florida location in Lakeland, FL.
According to the release, “the Central Florida location is a milestone for Florida’s largest operator as Trulieve becomes the first operator in Florida to reach 40 locations. Presently, Trulieve operates 39 other dispensaries throughout the State of Florida, including in the nearby communities of Tampa, Orlando, and Wesley Chapel. The storefront, located on North Florida Avenue in North Lakeland, is part of the company’s mission to expand and ensure safe, reliable patient access statewide.”
Trulieve Cannabis Corp (OTCMKTS:TCNNF) engages in the cultivation, possession, distribution, and sale of medical cannabis in the United States. It offers a suite of Trulieve branded products with approximately 125 SKUs, including nasal sprays, capsules, concentrates, syringes, and cannabis flower in tamper-proof containers for vaporizers, topical creams, tinctures, and vape cartridges.
The company distributes its products to Trulieve branded stores (dispensaries) in Florida, as well as takes orders online and by phone for delivery. As of November 20, 2018, the company operated 21 dispensaries.
“Trulieve has come a long way over the past three years – from closing out 2016 with only two stores to celebrating our record-breaking 40th store in Florida with even more to come in 2019 — and 2020 – as we continue to strategically plan for the future,” said Trulieve CEO Kim Rivers. “As the patient registry continues to grow and Florida’s residents continue to seek alternative, natural relief, we will continue our mission to expand access to the natural, effective, and safe medications they have come to rely on.”
Trulieve Cannabis Corp (OTCMKTS:TCNNF) generated sales of $93.4M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 20.5% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($41.1M against $64.9M, respectively).
GD Entertainment & Technology Inc. (OTCMKTS:GDET) is another stock that we had to include here, with shares well above the stock’s October lows, and nice gains on a trailing 52-week basis.
This is a very interesting story because the company recently opened a store for its CBD-based products subsidiary, The Greenery. The store, which is located at Palisades Center in West Nyack, New York, the second-largest shopping mall in the New York metropolitan area and the eighth-largest in the United States, was opened last week in time for Black Friday and the holiday shopping season.
According to the company, the strong performance seen during this initial weekend of sales at the store could indicate strong holiday sales in the weeks ahead. Management for GDET also noted that it is considering opening additional similar locations at other malls.
“We saw a ton of foot traffic, sales volume that promises a solid forecast, and a very good response from consumers in the store’s first week of open operations,” commented Anil Idnani, CEO of GDET. “This certainly justifies our strategy, and we plan to open additional stores in other high-traffic mall locations if we continue to see a strong response. It’s also important to note that the ramp in sales growth isn’t the only positive upshot we gain from this store. Based on Palisades Center data, we expect something like 10 million people could walk by our store and be exposed to our brand between now and the end of January, which is priceless exposure that we expect to pay off in many ways over time.”
We also think the company’s rationale for the store is very strong: “If you cater to only those people who already know they want CBD products and go to websites built to serve them, you are only going to be dealing with the same niche market. But when you put these products out there in front of shoppers at a popular mall or in a major retail chain store, you instantly massively expand the market you’re targeting. We have already sold a wide selection of products to customers who are trying CBD-based products for the first time. And we are proud they are starting with products from The Greenery. They will know exactly where they can conveniently find more.”
One other dimension that differentiates GDET in this list is diversification: it is also a fully-active and operating blockchain play. There are many potential synergies between these segments. But there is also the advantage of diversification of revenue streams, which may provide some cover if there is a further capitulatory washout in the hemp, cannabis, and CBD complex before the next leg higher in the space gets fully underway.
We would also note that the company just announced a substantial reduction in its outstanding share count to lighten the load and send a shareholder-friendly signal to the market.
Green Thumb Industries Inc (OTCMKTS:GTBIF) recently announced its financial results for the third quarter ended September 30, 2019. All currency is in U.S. dollars, unless noted otherwise.
According to the release, “Third quarter 2019 revenue increased 296% year-over-year to $68.0 million. Quarter-over-quarter revenue increased 52%. Topline results were driven both by organic growth across the Company’s consumer products and retail businesses as well as a full quarter of Integral Associates revenue.”
And the stock has been acting well over recent days, up something like 19% in that time.
Green Thumb Industries Inc (OTCMKTS:GTBIF) as a producer and distributor of cannabis products including flower, concentrates for dabbing and vaporizing, edibles, and topicals. The company markets its products through third party retailers. It also owns and operates a chain of 50 retail stores under the RISE dispensaries name. The company was founded in 2014 and is headquartered in Chicago, Illinois.
The company is a national cannabis cultivator, processor and dispensary operator, is dedicated to providing dignified access to safe and effective cannabis nationwide while giving back to the communities in which they serve.
As a vertically integrated company, GTI manufactures and sells a well-rounded suite of branded cannabis products including flower, concentrates, edibles, and topicals. The company also owns and operates a rapidly growing national chain of retail cannabis stores called RISE(TM) dispensaries.
Headquartered in Chicago, Illinois, GTI has seven manufacturing facilities and licenses for 50 retail locations across seven highly regulated U.S. markets. Established in 2014, GTI employs more than 350 people and serves hundreds of thousands of patients and customers each year.
The company was actually also named a Best Workplace 2018 by Crain’s Chicago Business.
Green Thumb Industries Inc (OTCMKTS:GTBIF) has about $117M in cash on the books, which is balanced by about $83M in total current liabilities. The company has pulled in $114M in trailing twelve-month revenues, representing 228% growth on a quarterly y/y basis.