One Pot Stock to Think About
In an era when investors seem to be getting more risk-averse due to all the market uncertainty, pot stocks are usually the beaten-down tickers.
But that doesn’t mean every stock in the cannabis industry is deep in the doldrums. For instance, on September 16, Green Thumb Industries Inc (OTCMKTS:GTBIF, CNSX:GTII) saw its share price surge as much as 5.7%.
What makes this performance even more special is that, on that trading day, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite were all in the red.
So, who is Green Thumb Industries? And why did GTBIF stock go up when the broader market was falling?
Let’s take a look.
Green Thumb Industries Inc
Green Thumb Industries is a pot consumer packaged goods company and a retailer. The company produces a portfolio of cannabis products under the brand names “Beboe,” “Dogwalkers,” “The Feel Collection,” “Rhythm,” and others. At the same time, Green Thumb owns and operates the “Rise” and “Essence” retail pot stores.
The company started in 2014 and has grown tremendously since then. Today, Green Thumb Industries has 13 manufacturing facilities, licenses for 95 retail locations, and operations in U.S. 12 states. (Source: “Investor Presentation | September 2019,” Green Thumb Industries Inc, last accessed September 17, 2019.)
Like a lot of smaller pot companies, Green Thumb Industries is listed on the Canadian Securities Exchange. Nevertheless, this is not a Canadian company. Headquartered in Chicago, Illinois, Green Thumb focuses entirely on the U.S. pot market at the moment.
And since the company also trades over the counter in the U.S., it’s very convenient for American investors to own Green Thumb Industries stock.
A New Catalyst for GTBIF Stock
The main catalyst behind GTBIF stock’s surge on September 16 came on September 13, when Green Thumb Industries announced that it will open one more store in Pennsylvania.
It will be opening “Rise Hermitage,” the seventh Rise location in Pennsylvania, on September 19. Once this new retail location opens, the company will have 32 pot stores across the United States. (Source: “Green Thumb Industries (GTI) to Open Rise Hermitage, the Seventh Rise Cannabis Store in Pennsylvania, on September 19,” Green Thumb Industries Inc, September 13, 2019.)
The opening of another cannabis retail store is certainly good news. Pennsylvania represents a solid market opportunity for the company as more than 180,000 patients have been registered for the state’s medical marijuana program.
At the same time, Green Thumb Industries has a first-mover advantage in the Pennsylvania medical marijuana market as the company already has Rise retail locations in Carlisle, Erie, Latrobe, Mechanicsburg, Steelton, and York. It also has a manufacturing facility in Danville, Pennsylvania that produces the company’s branded pot products.
Green Thumb Already Runs a Fast-Growing Business
The best part is, Green Thumb’s new store opening is not the only reason for investors to check out Green Thumb Industries stock. You see, while the company is not as big as the pot stocks that trade on major U.S. stock exchanges, it nonetheless runs a fast-growing business.
It operates through two main segments: consumer packaged goods and retail. And both segments have been firing on all cylinders.
In the second quarter of 2019, sales of Green Thumb Industries’ consumer packaged goods surged 276% year-over-year and 70% quarter-over-quarter, driven by both market growth and new distribution efforts. (Source: “Green Thumb Industries (GTI) Triples Revenue to $44.7 Million and Reports $5.0 Million in Adjusted Operating EBITDA in Second Quarter 2019,” Green Thumb Industries Inc, August 28, 2019.)
Meanwhile, the company’s retail revenue grew 189% year-over-year and 60% sequentially.
At the company level, Green Thumb Industries generated $44.7 million in total revenue for the second quarter of 2019, an amount that more than tripled the $13.6 of revenue it earned in the second quarter of 2018.
The business also became a lot more lucrative as its gross profit before biological asset adjustment totaled $23.2 million, or 52% of revenue for the quarter. That’s compared to $6.3 million, or $46% of revenue in the year-ago period.
Green Thumb Industries Inc (OTCMKTS:GTBIF) Stock Chart
Chart courtesy of StockCharts.com
As Green Thumb Industries Inc further expands its presence in the legal cannabis industry, I wouldn’t be surprised to see the rally continue for GTBIF stock.