Trulieve Cannabis Corp: Florida Pot Stock Crushes Q2 Results, Still on Deep Discount
Trulieve Cannabis Corp Remains a Top Pot Stock to Watch
Investors poured into cannabis stocks over the last year because they wanted to get in on a once-in-a-lifetime opportunity. Because of the massive long-term potential, cannabis stocks experienced huge growth, which sent valuations into the stratosphere.
Times have changed. Potential has given way to fundamentals, and impatient investors have sent marijuana stocks lower since May.
The good news is that those investors have not been discerning; weed stocks have, for the most part, fallen in tandem. This means some really excellent cannabis stocks, like Trulieve Cannabis Corp (OTCMKTS:TCNNF, CNSX:TRUL), are now trading at a deep discount.
What makes Trulieve stand out? In addition to being the leading medical cannabis company in Florida, with 30 dispensaries, the company recently reported strong second-quarter results, including ongoing profitability and a great outlook.
Despite the above, TCNNF stock is up just two percent year-to-date. That might not sound that bad—many of the biggest names in the industry in the red—but Trulieve stock is also down approximately 50% from its April intra-day high of $16.63.
Trading at $8.30 per share, TCNNF is one of the most beaten-down cannabis stocks in 2019. Or, put another way, Trulieve is one of the best pot stocks out there right now, trading at a steep discount.
TCNNF Stock Overview
Trulieve Cannabis is a “vertically integrated” pot company, which is corporate speak for a seed-to-sale company that cultivates and produces its own products. (Source: “Investor Overview,” Trulieve Cannabis Corp, last accessed August 20, 2019.)
Trulieve is the largest fully licensed medical cannabis company in Florida (the third-most-populous state in the country), with 30 branded dispensaries. The company has more than 150 different products (flower, cannabidiol, tinctures, capsules, and topical ointments) and is regularly adding to its product line.
Thanks to its strategically located dispensaries, Trulieve has captured roughly 65% of the Florida cannabis market share. And its patient base has been expanding, growing at roughly 10% month-to-month.
While Trulieve Cannabis Corp is known for its domination of the Florida medical marijuana market, acquisitions in Connecticut, Massachusetts, and California have opened up its operations outside the Sunshine State.
In late July, the company entered into a multi-year lease agreement with Innovative Industrial Properties Inc (NYSE:IIPR), landlord to the U.S. cannabis industry, for a 150,000-square-foot cultivation and processing facility in Holyoke, Massachusetts. (Source: “Innovative Industrial Properties Acquires Massachusetts Property and Enters into New Tenant Relationship with Trulieve Cannabis Corp.” Cision, July 29, 2019.)
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TCNNF Stock Information |
|
| Market Cap |
$926.4 Million |
|
52-Week High |
$21.00 |
| 52-Week Low |
$6.68 |
|
Shares Outstanding: |
26.9 Million |
| Float |
32.2 Million |
|
50-Day Moving Average: |
$10.05 |
| 200-Day Moving Average: |
$11.85 |
(Source: “Trulieve Cannabis Corp. (TCNNF),” Yahoo! Finance, last accessed August 21, 2019.)
Record Q2 Revenue and Profits
On August 14, Trulieve Cannabis Corp announced that revenue for its second quarter, ended June 30, increased 149% year-over-year and 30% sequentially to a record $57.9 million. The large increase came as a result of increased smokable flower sales and patient count. (Source: “Trulieve Reports Strong Operational Results, Record Revenue and Profits, and Grows Footprint in the Second Quarter of 2019,” Cision, August 14, 2019.)
Trulieve also reaffirmed its full-year guidance for 2019 revenue in the range of $220.0 to $240.0 million. At the midpoint, that represents year-over-year growth of 124%. Its revenue for 2020 is projected to be in the range of $380.0 to $400.0 million.
Analyst Take
Trulieve stock hasn’t been crushing it in 2019, but its fundamentals are strong. And that’s what will separate the weed from the chaff once the legal pot industry evolves.
Not even a quarter of record revenue and profits could help TCNNF stock differentiate itself from the industry losers (and there are a lot of losers out there).
Thanks to operational efficiencies, a growing business footprint, strong brand awareness, increased patient count and loyalty, and strong financial discipline, Trulieve management believes its efforts will make for strong results for the rest of 2019.
This may not translate into higher stock prices right now, but once saner heads prevail and fundamentals trump potential, it should. This puts Trulieve Cannabis Corp in an enviable position.
