Over-the-Counter Pot Stock Earning $100 Million of Revenue per Month?

A Top Pick for Pot Stock Investors

Over-the-counter stocks don’t have the best reputation. The idea is, if an American company was solid enough, it would be listed on either the New York Stock Exchange (NYSE) or the Nasdaq.

While that impression often turns out to be true, it doesn’t really apply to companies in the cannabis industry.

You see, due to the current state of legislation in the U.S., many American pot companies choose to list their shares on stock exchanges in Canada. As a result, their shares may trade in the U.S. only over the counter.

Of course, there are some NYSE- or Nasdaq-listed pot stocks. But if you ignore the over-the-counter names in the marijuana industry, you could miss out on some major opportunities.

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Check out Curaleaf Holdings Inc (CNSX:CURA, OTCMKTS:CURLF), for instance. It’s a vertically integrated cannabis operator headquartered in Wakefield, MA.

The company has 23 cultivation sites, more than 30 processing facilities, a retail network of 106 dispensaries, and close to 2,000 points of sale through its wholesale business. With operations in 23 states across the country, Curaleaf has an addressable population of 192 million. (Source: “The World’s Leading Cannabis Company,” Curaleaf Holdings Inc, last accessed May 17, 2021.)

In the U.S., the company has two of the most widely distributed marijuana brands: “Curaleaf” for wellness products and “Select” for recreational products.

Curaleaf is also going international. Thanks to its recently-closed acquisition of EMMAC Life Sciences Limited, Curaleaf is the first U.S. multistate cannabis operator to have a meaningful presence in Europe.

Like many American pot companies, Curaleaf Holdings Inc is listed on the Canadian Securities Exchange—its ticker symbol there is “CURA.” In the U.S., investors can find Curaleaf stock trading over the counter under the ticker “CURLF.”

As I said earlier, in most cases, the impression is that over-the-counter stocks tend to be weak. But Curaleaf is an extremely strong company in its industry. Just take a look at its latest earnings report and you’ll see what I mean.

In the first quarter of 2021, Curaleaf generated $260.0 million of revenue, representing a whopping 170% increase year-over-year and marking a new record for the company. The amount was above management’s previous guidance range of $250.0 to $255.0 million. (Source: “Curaleaf Reports Record First Quarter 2021 Financial and Operational Results,” Curaleaf Holdings Inc, May 10, 2021.)

The revenue growth was across the board: Curaleaf’s retail revenue surged by 231% year-over-year and its wholesale revenue increased by 254% year-over-year.

The company also generated record adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter. At $63.0 million, the amount more than tripled the $20.0 million of adjusted EBITDA Curaleaf earned in the year-ago period.

And the best is likely yet to come.

In the company’s latest earnings conference call, Curaleaf Holdings Inc’s executive chairman, Boris Jordan, said, “…we are increasing our guidance for the second quarter to $305 million to $315 million, which is above consensus based on the performance of our business during April [and] the beginning of May.” (Source: “Curaleaf Holdings, Inc. (CURLF) CEO Joe Bayern on Q1 2021 Results – Earnings Call Transcript,” Seeking Alpha, May 10, 2021.)

He continued, “Thus, we remain on track to meet our full year [International Financial Reporting Standards] revenue guidance of $1.2 billion to $1.3 billion and an adjusted EBITDA margin of approximately 30%.”

Just think about that for a second.

In the current U.S. cannabis industry, if a company generates more than $100.0 million in quarterly revenue, it can be considered to be one of the heavyweight players. Curaleaf is on track to generate $305.0 to $315.0 million of revenue in the second quarter. That would translate to about $100.0 million in revenue per month!

Curaleaf Holdings Inc (OTCMKTS:CURLF) Stock Chart

Chart courtesy of StockCharts.com

Analyst Take

Fundamentally, Curaleaf Holdings Inc is one of the best—if not the best—pot stocks on the market.

But that doesn’t mean it’s immune to volatility. Like most pot stocks, CURLF stock enjoyed a strong rally for a substantial portion of the past year but has pared some of its gains since peaking in February 2021. Right now, Curaleaf stock is hovering around its 50-day moving average.

For investors who believe in the future of the U.S. cannabis industry, this pullback could represent an opportunity.