Trulieve Cannabis Corp: Up 60% in Two Months; More Gains Ahead?

Marijuana stockWill the Upward Momentum Continue for This Pot Stock?

Among the dozens of pot stocks trading in the market, Trulieve Cannabis Corp (OTCMKTS:TCNNF, CNSX:TRUL) has been one of my favorites.

Even though the company is listed on the Canadian Securities Exchange and trades over the counter in the U.S., I believe it deserves as much investor attention as the NYSE- or Nasdaq-listed pot stocks.

In particular, on July 2, I published an article titled, “Trulieve Cannabis Corp: This $12 Pot Stock Could Deliver Big Returns.”

I hope you took advantage of that piece, because Trulieve is no longer a $12.00 pot stock. Today, TCNNF trades at over $20.00 per share. So, in just over two months, the stock has returned more than 60%.

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Obviously, getting into a stock after it already shot through the roof is not the best-case scenario. However, if you take a look at what Trulieve has been doing lately, you’d see that there are still plenty of reasons to like Trulieve stock.

First, Trulieve runs a fast-growing business. In the second quarter of 2020, the company generated a record $120.8 million in revenue, which represented a 26% increase quarter-over-quarter and a whopping 109% increase year-over-year. (Source: “Trulieve Reports Strong Consecutive Growth and Raises Guidance,” Trulieve Cannabis Corp, August 12, 2020.)

Keep in mind that Trulieve delivered this level of performance in a very challenging economic environment. Looking around, there are many companies that experienced substantial sales declines in the second quarter due to the COVID-19 pandemic.

Second, even though the marijuana industry is still at an early stage, Trulieve is already profitable.

In the second quarter of 2020, the company earned net income of $6.6 million. Notably, Trulieve generated $60.5 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter, which represented 26% growth sequentially and a 92% increase from a year ago. This also marked the company’s 10th consecutive quarter of adjusted EBITDA growth and profitability.

Third, while Trulieve is not the biggest pot stock, it is by far the biggest player in its key operating market: Florida. In fact, Trulieve is the first licensed cannabis company in Florida.

Trulieve has turned that first mover advantage into the largest dispensary network in the Sunshine State. It is estimated that Trulieve is responsible for selling around 50% of medical cannabis dispensed in Florida. (Source: “Relief you can rely on,” Trulieve Cannabis Corp, last accessed September 11, 2020.)

Most recently, the company announced the opening of Trulieve Tampa Hillsborough, which marked Trulieve’s 58th dispensary in Florida and the 60th dispensary in the U.S. (Source: “Trulieve Reaches 60 Stores Nationally, Expands Florida Reach with New Tampa Location,” Trulieve Cannabis Corp, September 10, 2020.)

Note that the company has adapted its operations to this pandemic environment. Trulieve’s entire catalog—including more than 500 SKUs that range from smokable cannabis, concentrates, and tinctures, to topical creams and vaporizers—can be ordered online. The company offers statewide home delivery as well as in-store pickup and curbside pickup options.

And the best could be yet to come. Seeing Trulieve’s solid financial performance in the first half of this year, the company’s management decided to raise their guidance. Previously, they expected the company to generate $380.0 million to $400.0 million in revenue and $140.0 million to $160.0 million in adjusted EBITDA in full year 2020. Now they are projecting revenue of $465.0 million to $485.0 million and adjusted EBITDA of $205.0 million to $225.0 million for the year.

Trulieve is also expanding its presence and plans to have 68 stores nationwide by the end of this year.

In the latest earnings conference call, Trulieve’s chief executive officer, Kim Rivers, said, “…we are very, very comfortable with our ability to meet our previously stated goal of 68 stores and in 2020 we may be just a little bit ahead of that in 2020.” (Source: “Trulieve Cannabis Corp.’s (TCNNF) CEO Kim Rivers on Q2 2020 Results – Earnings Call Transcript,” Seeking Alpha, August 12, 2020.)

Trulieve Cannabis Corp (OCTMKTS:TCNNF) Stock Chart

Chart courtesy of StockCharts.com

Analyst Take

Going forward, the U.S. stock market will be facing a lot of uncertainty. The COVID-19 pandemic is ongoing, and the outcome of the U.S. presidential election could change investor sentiment. In this kind of environment, marijuana stocks will likely remain volatile.

Still, with a deeply entrenched market position and a growing business, Trulieve remains one of the top picks for pot stock investors.