{"id":69243,"date":"2023-10-05T21:40:01","date_gmt":"2023-10-06T01:40:01","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/aiming-high-where-to-find-profits-among-weed-stocks\/"},"modified":"2023-10-05T21:40:04","modified_gmt":"2023-10-06T01:40:04","slug":"aiming-high-where-to-find-profits-among-weed-stocks","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=69243","title":{"rendered":"Aiming High. Where to Find Profits Among Weed Stocks."},"content":{"rendered":"
\n

The thrill has gone from cannabis stocks, as the past few years have failed to deliver the lush industry profits envisioned when legalization began to waft across the continent.<\/p>\n

But some investors have taken a liking to the stocks lately. After tumbling 90% from its 2021 peak, the
\n AdvisorShares Pure US Cannabis
\n exchange-traded fund (ticker: MSOS) is up 50% in the past month, to a recent price of $7.15.<\/p>\n

\n

What\u2019s created a buzz is the Biden administration\u2019s proposal to move the drug to a less severe category of federally illegal drugs, and the vote of a U.S. Senate committee to advance a bill that would ease some banking restrictions for state-licensed cannabis operators.<\/p>\n

While a cannabis banking bill seems unlikely to make it through the paralyzed House of Representatives, some cannabis operators are generating cash and have stocks that don\u2019t make you pay too much for that cash flow.<\/p>\n

We used
\n FactSet
\n to screen the stocks of cannabis retailers that trade at an enterprise value of at least half a billion dollars, when adding their debt to their stock market capitalization, then subtracting their cash.<\/p>\n

The resulting nine names show that the hefty gain in an ETF like the AdvisorShares Pure US Cannabis masks a wide variance across the industry\u2019s stocks. Onetime industry leader
\n Canopy Growth
\n (CGC) has sunk to a penny stock, while Canadian rival
\n Tilray Brands
\n (TLRY) has battled falling marijuana prices and tried to diversify into the beer business. Their shares are down significantly this year.<\/p>\n

<\/p>\n

<\/p>\n

\n
\n\n\n\n\n\n\n\n\n\n\n\n\n
Company \/ Ticker<\/th>\nPrice<\/th>\nYTD Price Change<\/th>\nEnterprise Value (mil)<\/th>\nFully Diluted EPS (TTM total)<\/th>\nFree Cash Flow Per Share (TTM total)<\/th>\nEnt Val \/ Operating EBITDA<\/th>\n<\/thead>\n
Trulieve Cannabis \/ TCNNF<\/b><\/td>\n$5.81<\/td>\n-23%<\/td>\n$1,884<\/td>\n-3.49<\/td>\n-0.44<\/td>\n6<\/td>\n<\/tr>\n
Green Thumb Industries \/ GTBIF<\/b><\/td>\n10.63<\/td>\n23<\/td>\n2,940<\/td>\n-0.08<\/td>\n0.07<\/td>\n9<\/td>\n<\/tr>\n
Verano Holdings \/ VRNOF<\/b><\/td>\n4.45<\/td>\n43<\/td>\n1,934<\/td>\n-0.83<\/td>\n0.15<\/td>\n9<\/td>\n<\/tr>\n
Cresco Labs \/ CRLBF<\/b><\/td>\n1.93<\/td>\n7<\/td>\n1,164<\/td>\n-0.77<\/td>\n0.06<\/td>\n10<\/td>\n<\/tr>\n
Curaleaf Holdings \/ CURLF<\/b><\/td>\n4.11<\/td>\n-4<\/td>\n4,112<\/td>\n-0.61<\/td>\n-0.01<\/td>\n25<\/td>\n<\/tr>\n
Cannabist Company Holdings \/ CBSTF<\/b><\/td>\n0.86<\/td>\n15<\/td>\n867<\/td>\n-1.00<\/td>\n-0.07<\/td>\n100<\/td>\n<\/tr>\n
TerrAscend \/ TSNDF<\/b><\/td>\n1.97<\/td>\n74<\/td>\n795<\/td>\n-1.43<\/td>\n0.00<\/td>\n923<\/td>\n<\/tr>\n
Canopy Growth \/ CGC<\/b><\/td>\n0.68<\/td>\n-70<\/td>\n937<\/td>\n-1.85<\/td>\n-0.76<\/td>\nNM<\/td>\n<\/tr>\n
Tilray Brands \/ TLRY<\/b><\/td>\n2.24<\/td>\n-17<\/td>\n1,776<\/td>\n-2.35<\/td>\n-0.02<\/td>\nNM<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

NM=not meaningful<\/p>\n

Source: Factset Research Systems<\/p>\n<\/div><\/div>\n<\/p><\/div>\n

Tallying profit according to generally accepted accounting principles, FactSet finds that none of the weed sellers were in the black over the past four quarters combined.<\/p>\n

Setting aside noncash expenses, however, a number of the companies are at least producing cash from their operations. Three even generated some free cash flow\u2014including capital expenditures \u2014 over the past four reported quarters:
\n Green Thumb Industries
\n (GTBIF),
\n Verano Holdings
\n (VRNOF), and <\/p>\n

Cresco
\n Labs (CRLBF).<\/p>\n

So we ranked the stocks by their cheapness in relation to their last four quarters\u2019 operating cash flow\u2014that is, their operating income before interest, taxes, depreciation and amortization. By that measure, some still look cheap, even after their recent rise.<\/p>\n

Green Thumb, Verano, Cresco, and
\n Trulieve Cannabis
\n (TCNNF) all trade at 10-times trailing Ebitda or less. By way of comparison, the S&P 500 has sported an Ebitda multiple above 15 in recent times. <\/p>\n

The federal government may not do much for the cannabis industry this year, but there remain growth opportunities as states continue to ease their laws. New York state is about to announce over 1,000 recreational marijuana licenses, after taking two years to draw up regulations.<\/p>\n

Legal weed could yet become an investible business.<\/p>\n

Write to Bill Alpert at william.alpert@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The thrill has gone from cannabis stocks, as the past few years have failed to deliver the lush industry profits envisioned when legalization began to waft across the continent. But some investors have taken a liking to the stocks lately. After tumbling 90% from its 2021 peak, the AdvisorShares Pure US Cannabis exchange-traded fund (ticker: […]<\/p>\n","protected":false},"author":1,"featured_media":69244,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-69243","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nAiming High. 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