JUSHF Stock Is Down but Looks Set to Bounce

The broader stock market continues to take a beating, and marijuana stocks are no exception. However, in addition to surging inflation, rising interest rates, and a looming recession, marijuana companies in the U.S. operate in an industry that's still illegal at the federal level.

This is despite 68% of Americans believing that pot should be legal. Moreover, a recent poll found that more Americans smoke cannabis than tobacco and that cannabis use in the U.S. is at an all-time high, soaring by one third in just a year. (Source: “Gallup Poll Finds More Americans Smoke Marijuana Than Cigarettes,” Forbes, August 29, 2022.)

The indecision in Washington over pot legalization has been weighing down U.S. cannabis stocks. While the Cannabis Administration and Opportunity Act was presented to the legislature in late July, chances aren't great it will get passed as it currently stands.

As such, a number of excellent, profitable pot companies have been unjustly punished in the stock market. One of the best is Jushi Holdings Inc (CNSX:JUSH, OTCMKTS:JUSHF).

Jushi recently reported another solid quarter of financial results. Those results included double-digit year-over-year revenue growth and triple-digit earnings growth.

Despite reporting outstanding results, expanding its business footprint, launching new products, and opening new dispensaries, shares of Jushi Holdings Inc continue to take a drubbing. As of this writing, Jushi stock is:

• Up by four percent over the last three months
• Down by 50% over the last six months
• Down by 60% over the last year

Ugly, but by no means unique. The ETFMG Alternative Harvest ETF (NYSEARCA:MJ), which is the world’s largest cannabis exchange-traded fund (ETF), is down by 47% in 2022 and 63% year-over-year. Meanwhile, the AdvisorShares Pure US Cannabis ETF (NYSEARCA:MSOS) is down by 47% this year and 59% year-over-year.

Wall Street analysts are bullish on Jushi Holdings Inc, though. Their average 12-month share-price target for JUSHF stock is $3.07 and their high estimate is $3.46. This points to potential gains in the range of 60% to 87%.

Chart courtesy of StockCharts.com

About Jushi Holdings Inc

Jushi Holdings Inc is a multistate owner and operator of cannabis cultivation, processing, and retail facilities.

The company has highly concentrated positions in markets with favorable regulatory developments, including California, Illinois, Nevada, Pennsylvania, and Virginia. The company is also targeting emerging pot markets like Pennsylvania, Virginia, and Ohio. (Source: “Investor Presentation: September 2022,” Jushi Holdings Inc, last accessed September 6, 2022.)

Jushi currently operates more than 30 dispensaries under the "BEYOND / HELLO" brand and expects its dispensary count to rise to 36 by the end of 2022 and to 50 by the end of 2023. The company also operates six cultivation facilities and six manufacturing facilities.

Some of Jushi Holdings Inc’s award-winning brands are "The Bank" (marijuana flower), "The Lab" (vape products), "Tasteology" (edibles), Seche (marijuana fine grind and fine flower), "Nira Medicinals" (cannabidiol products), and "Nira" (also cannabidiol products).

Another Quarter of Great Results

For the second quarter ended June 30, Jushi announced that its revenue increased by 52.4% year-over-year and 17.6% sequentially to $72.8 million. Its retail revenue went up by 16% sequentially to $67.3 million, while its wholesale revenue increased by 42.1% sequentially to $5.5 million. (Source: “Jushi Holdings Inc. Reports Second Quarter 2022 Financial Results and Announces Non-Reliance on Previously Issued First Quarter 2022 Financial Statements,” Jushi Holdings Inc, August 29, 2022.)

The company's gross profit in the second quarter of 2022 was $26.7 million, or 36.7% of its revenue. That's compared to $19.1 million, or 30.9% of its revenue, in the first quarter of 2022. Jushi Holdings Inc's adjusted gross profit was $27.8 million, or 38.3% of its revenue, compared to $24.8 million, or 40.0% of its revenue, in the first quarter of 2022.

Jushi reported second-quarter 2022 net income of $12.1 million, or $0.06 per basic share, up by 247% over the second-quarter 2021 net income of $3.6 million, or $0.02 per share. For the first quarter of 2022, the company reported a net loss of $19.8 million, or $0.11 per share.

Jushi Holdings Inc's 2022 second-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $500,000, up by $1.4 million from a loss of $900,000 in the first quarter of 2022 and down from $4.6 million in the second quarter of 2021.

The company ended the second quarter of 2022 with cash and cash equivalents of $43.2 million.

During the second quarter, Jushi Holdings Inc:

• Completed its acquisition of NuLeaf, Inc., which expanded Jushi's vertically integrated business footprint in Nevada
• Opened its 32nd and 33rd U.S. retail locations
• Was awarded a provisional medical marijuana dispensary license in the Cincinnati Tri-State Area of Ohio, establishing Jushi’s fifth vertically integrated state-level operation
• Launched two new product lines in Pennsylvania

Following the second quarter, Jushi Holdings Inc opened its 34th and 35th U.S. retail locations (its third and fourth Beyond / Hello dispensaries) in Alexandra and Fairfax, VA.

Analyst Take

As explained above, Jushi stock is one of the best, overlooked U.S. marijuana stocks. The company recently reported another quarter of fabulous results, which included top-line growth and improved sequential profitability.

Jushi Holdings Inc boasts industry-leading organic revenue and adjusted EBITDA margin growth. It also has a highly concentrated position in markets with favorable regulatory developments, a best-in-class merger-and-acquisition track record, a strong liquidity position, and an industry-leading online platform.

The only thing missing is for JUSHF stock's share price to catch up to all of the company's developments.