Curaleaf Holdings Inc: Blockbuster Deal Should Help This $11 U.S. Pot Stock Double in Price
Curaleaf Holdings Inc Strikes Near-Billion-Dollar Deal
Curaleaf Holdings Inc (OTCMKTS:CURLF, CNSX:CURA), an integrated medical and wellness cannabis company with the biggest presence when it comes to branded marijuana retail stores in the U.S., is about to get even bigger.
The Wakefield, Massachusetts-based company just announced a nearly $950.0-million deal that will bring together two market-leading cannabis companies. The deal, which is the largest ever between two U.S. marijuana companies, gives Curaleaf Holdings the most popular cannabis oil brands in California, Nevada, and Oregon.
Curaleaf stock is already up 130% year-to-date, but this new acquisition could help it double in price in the second half of 2019, with strong momentum carrying it into 2020.
Curaleaf Holdings Inc Overview
Curaleaf Holdings Inc cultivates, processes, markets, and dispenses a range of cannabis products, including flower, pre-rolls, dry-herb vaporizer cartridges, tinctures, lozenges, capsules, and edibles. (Source: “Investor Presentation February 2019,” Curaleaf Holdings Inc, last accessed May 2, 2019.)
The company currently has operations in 13 states. It owns and operates 42 dispensaries, 12 cultivation sites, and 10 processing sites.
Curaleaf’s 12 cultivation sites cover approximately 650,000 square feet, with current production capacity of 63,000 pounds of dry flower. By 2020, the company expects its cultivation capacity to grow to over a million square feet, which should be able to produce more than 290,000 pounds of dry flower.
| Curaleaf Stock Information | |
| Market Cap | $4.9 Billion |
| 52-Week High | $11.73 |
| 52-Week Low | $3.88 |
| Shares Outstanding | 11.8 Million |
| Float | 185.6 Million |
| 50-Day Moving Average | $9.26 |
| 200-Day Moving Average | $7.13 |
(Source: “Curaleaf Holdings, Inc. (CURLF),” Yahoo! Finance, last accessed May 2, 2019.)
CURLF stock has had tremendous momentum in 2019. In the first part of the year, the stock was fueled by the so-called January effect, a seasonal boost in stock prices. The supercharged January effect actually lasted well beyond the first month of the year.
Curaleaf stock got an additional boost on late March after announcing strong fourth-quarter results. The stock was juiced a little higher on May 1 after the company announced its acquisition of Cura Partners, Inc., hitting a new 52-week high of $11.73. This represents a year-to-date gain of 179%.
Chart courtesy of StockCharts.com
Curaleaf Acquires Cura Partners in Blockbuster Transaction
On May 1, Curaleaf announced that it had signed a definitive agreement to acquire the state-regulated cannabis business of Cura Partners in an all-stock transaction valued at $948.8 million. (Source: “Curaleaf to Acquire Select, the Leading Cannabis Wholesale Brand in the U.S.,” Curaleaf Holdings Inc, May 1, 2019.)
With the Cura Partners acquisition, Curaleaf will be home to “Select,” the leading cannabis wholesale brand in the entire country. Select’s cannabis products are sold by more than 900 retailers, making it the leading cannabis brand in key states like California, Oregon, Nevada, and Arizona.
The deal includes Select brand’s manufacturing, processing, distribution, marketing, and retail operations, as well as all of the cannabis products marketed under the Select brand name.
The arrangement brings together two of the strongest cannabis brands in the country and a diversified footprint that stretches coast to coast. Once the deal is completed, the company will have 15 state licenses, which is just short of the number held by Harvest Health & Recreation Inc (OTCMKTS:HRVSF, CSE:HARV).
In addition to creating a massive cannabis company, the acquisition is expected to lead to cost efficiencies, including a 25% drop in processing costs and a 50% reduction in Select’s material costs.
“We think the U.S. is the best cannabis market in the world, and it will be the fastest growing and so we’re executing on a strategy to be the biggest company in our own domestic market,” said Joseph Lusardi, CEO of Curaleaf.
“We’re not really focused on people buying us or any other strategy but executing on what we’re trying to do, which is be the most successful cannabis company in the United States.”
Analyst Take
Curaleaf Holdings Inc is a financially solid cannabis company with a strong presence in California, Florida, and 11 other key under-served states. This has helped the company build the largest national brand of marijuana retail dispensaries in the U.S.
Curaleaf’s recently announced acquisition of Cura Partners, combined with several other cost-efficient moves, stands to boost the company’s already impressive geographic diversification.
Curaleaf stock has had great momentum in 2019 thanks to its aggressive acquisition strategy and strong financials. The Cura deal will help juice the company’s financials and could lead CURLF stock to more than double in price.
