Little-Known Pot Stock Providing Big Returns
“If you believe in the future of the cannabis industry, this under-the-radar pot stock could be one of the best opportunities on the market.”
That’s what I told Profit Confidential readers about Jushi Holdings Inc (CNSX:JUSH, OTCMKTS:JUSHF) in September 2020. In that article, titled “Jushi Holdings Inc: Why This $2.14 Pot Stock Might Double Again,” I explained why Jushi stock—which had already bounced back from its March 2020 lows—could see further upside.
Fast-forward to today and JUSHF stock is no longer a $2.14 pot stock. As of this writing, Jushi stock trades at $5.18 apiece, marking a return of 142%.
But the opportunity might not be over yet. Based on what the company has been doing, JUSHF stock still has substantial growth potential.
Allow me to explain.
Jushi Holdings Inc is a vertically integrated, multistate cannabis company headquartered in Boca Raton, FL. Like many U.S. pot companies, Jushi stock is listed north of the border on the Canadian Securities Exchange and trades in the U.S. over the counter.
At its current share price, Jushi Holdings Inc has a market capitalization of about $820.0 million.
In the U.S. pot sector, that’s not a small amount, as there are plenty of companies with market caps of $300.00 million or less (micro-caps). But it’s not in the big league either. The heavyweight multistate marijuana operators—like Green Thumb Industries Inc (CNSX:GTII, OTCMKTS:GTBIF) and Curaleaf Holdings Inc (CNSX:CURA, OTCMKTS:CURLF)—each command several billion dollars of market cap.
What we can infer, then, is that Jushi Holdings Inc might be a pot company that has established some presence in the business but is yet to expand to the big-player level.
A look at the company’s operations confirms this. According to its latest investor presentation, Jushi Holdings has 20 open stores, 14 planned stores, five cultivation sites, and five extraction and processing facilities. (Source: “Investor Presentation,” Jushi Holdings Inc, last accessed July 26, 2021.)
Not bad, but there’s more to come.
Jushi is currently active in six states: California, Illinois, Massachusetts, Nevada, Pennsylvania, and Virginia. Notably, the company has 13 operational dispensaries in Pennsylvania and plans to open five more in the state this year. In Virginia, the company has one operating dispensary at the moment but plans to open five additional locations from 2021 to 2022.
Excellent Financial Results
Financially, Jushi is telling a great growth story.
In 2020, the company generated $80.8 million of total revenue, marking a 689.6% increase year-over-year. Its gross profit was $43.1 million, up by a staggering 793.0% from 2019. (Source: “Jushi Holdings Inc. Reports Fourth Quarter and Full Year 2020 Financial Results and First Quarter 2021 Financial Results,” Jushi Holdings Inc, June 9, 2021.)
Of course, pot companies are known for delivering high growth rates, but Jushi’s numbers are impressive even by cannabis-industry standards.
In the first quarter of 2021, things continued to improve.
The company’s total revenue grew by another 29.0% sequentially to $41.7 million. Meanwhile, Jushi’s gross profit rose by 4.7% quarter-over-quarter to $20.1 million. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved as well, from $2.6 million in the fourth quarter of 2020 to $3.0 million in the first quarter of 2021.
Jushi Holdings Inc reported that it had a solid balance sheet, too. It had approximately $168.0 million of cash, cash equivalents, and short-term investments in securities as of March 31. The company’s total debt was about $82.0 million at the time.
Looking ahead, Jushi’s CEO, chairman, and founder, Jim Cacioppo, said,
For the second quarter of 2021, we expect revenues to be between $45 to $48 million and Adjusted EBITDA to be between $4 to $6 million. We continue to believe our strong momentum, enviable footprint, and solid balance sheet positions the Company well to execute on its current plans and drive long-term shareholder value through 2021 and beyond.
Given the numbers we saw for the first quarter, if Jushi meets management’s guidance range, it would have achieved another solid quarter of sequential growth.
Jushi Holdings Inc (OTCMKTS:JUSHF) Stock Chart
Chart courtesy of StockCharts.com
At the end of the day, keep in mind that pot stocks often move as a group. For instance, the industry enjoyed a huge rally from the summer of last year to early this year.
Since pot stocks peaked in February 2021, though, sentiment seems to have changed. Most pot stocks have had trouble continuing their momentum. And as we can see from the above Jushi stock chart, while Jushi Holdings Inc has provided enormous returns since I first profiled it last September, its performance in recent months hasn’t been stellar.
Once investors warm up to the marijuana sector again, though, we could see JUSHF stock hopping back on an uptrend.