A Fast Grower in a Fast-Growing Industry
The No. 1 reason investors like pot stocks is their growth potential. In other words, in order for cannabis operators to maintain their appeal to investors, they need to show the ability to expand.
But because cannabis is a highly regulated business, expanding one’s footprint is no easy feat. And that’s why, even though the industry as a whole has been growing for many years, there are plenty of bears arguing that certain pot stocks don’t deserve their valuations.
The good news is, some pot companies have actually been following through with their expansion plans. Curaleaf Holdings Inc (CNSX:CURA, OTCMKTS:CURLF) serves as a great example.
At the end of its first quarter of 2021, Curaleaf had 23 cultivation sites with more than two million square feet of cultivation capacity, 30 processing sites, 1,992 wholesale partnership accounts, and 102 retail locations. Combined, the company reaches an addressable population of 192 million. (Source: “Curaleaf Reports Record First Quarter 2021 Financial and Operational Results,” Curaleaf Holdings Inc, May 10, 2021.)
Based on where other pot companies stand in the market, that’s a pretty sizable presence.
But some of those numbers aren’t exactly accurate anymore. That’s because, since then, Curaleaf has further expanded.
In April, Curaleaf hosted the grand opening of its brand-new 4,700-square-feet location in Westmont, IL. It was the company’s 10th retail dispensary in the state and its 103rd nationwide. (Source: “Curaleaf Announces New Branding for Illinois Retail Locations, Opening of New Westmont Store and Contribution to Il Social Equity Partners,” Curaleaf Holdings Inc, April 5, 2021.)
Also in April, Curaleaf opened two new locations in Horsham and Philadelphia, marking its 11th and 12th locations in Pennsylvania.
Then, on April 30, the company opened a new Curaleaf-branded location in South Portland, ME. While Curaleaf had been operating in Maine’s medical marijuana market since 2014, this marked the company’s first recreational pot location in the state.
In June, the company announced the opening of “Curaleaf Edgewater Park,” its second dispensary in the state of New Jersey and its 107th in the country. (Source: “Curaleaf Expands Presence in New Jersey With New Dispensary and Cultivation Facility,” Curaleaf Holdings Inc, June 24, 2021.)
Other than opening new dispensaries, Curaleaf has been broadening its cultivation footprint.
On May 17, 2021, the company announced that it had entered an agreement to acquire Los Sueños Farms and its related entities, which happen to be the largest outdoor marijuana growing operation in the state of Colorado. (Source: “Curaleaf to Acquire Colorado-Based Los Sueños,” Curaleaf Holdings Inc, May 17, 2021.)
The upcoming acquisition will include three outdoor cannabis growing facilities covering 66 acres of cultivating capacity, a 1,800-plant indoor growing facility, and two recreational pot dispensaries.
The transaction is expected to add more than 50,000 pounds per year of low-cost wholesale capacity to Curaleaf’s footprint in Colorado.
Curaleaf Holdings Inc has been moving well internationally, too. After the first quarter ended, Curaleaf completed its previously announced acquisition of EMMAC Life Sciences Limited, the largest vertically integrated independent cannabis company in Europe.
In May, Curaleaf’s wholly owned subsidiary Adven GmbH launched its own range of medical cannabis products in Germany, the largest medical cannabis market in Europe.
Keep in mind that all this progress was made quite recently. But it hasn’t translated to more upward momentum in Curaleaf stock’s price. In fact, as the following chart shows, CURLF stock has been trading sideways since the end of the first quarter of 2021.
Curaleaf Holdings Inc (OCTMKTS:CURLF) Stock Chart
Chart courtesy of StockCharts.com
And it’s not like Curaleaf Holdings Inc’s first-quarter results were a flop. During the quarter, the company generated a record-high $260.0 million of revenue, representing a staggering 170% increase year-over-year.
Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $63.0 million, up by 213% year-over-year and also marking a new record.
Pot companies are known for high growth rates, but Curaleaf’s numbers are impressive even by pot-industry standards.
Curaleaf Holdings Inc doesn’t plan to stop the momentum anytime soon. For full-year 2021, management forecasts revenue in the range of $1.2 to $1.3 billion. Considering that Curaleaf’s revenue totaled $626.6 million in 2020, meeting the 2021 guidance range would translate to another year of top-notch growth rates.
Ultimately, pot stocks get more investor attention when they’re soaring and less attention when they’re not.
Right now, they aren’t soaring, as top names like Curaleaf stock seem to be consolidating rather than shooting through the roof.
For investors who believe in the future of the cannabis industry, this could be a good time to revisit some solid pot stocks like Curaleaf Holdings Inc.