Finding a good business in the cannabis industry that is consistently profitable is no easy task. Finding one that is also cheap is even more difficult. But there are a couple of gems out there that can provide investors with some great bang for their buck while also providing them with incredible long-term growth opportunities…
You will be hard-pressed to find better-valued pot stocks right now than MariMed (OTC:MRMD) and Trulieve Cannabis (OTC:TCNNF). Both companies are profitable (on an adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, basis), and both have excellent growth potential.
At a market cap of about $230 million, MariMed isn’t one of the larger cannabis companies out there. But there’s loads of potential here, especially as the company comes off a stellar fourth-quarter and full-year 2020 earnings report. Year-end results released March 23 showed revenue of $20.4 million, nearly quadruple the $4.2 million it recorded in the prior-year period. Its adjusted EBITDA was a positive $7.7 million, versus a loss of $16 million a year earlier. And for the full year, cannabis sales totaled $50.9 million, while adjusted EBITDA was $16.3 million.
Given its market cap, MariMed is trading at a very attractive 14 times adjusted EBITDA. To put that into context, this is how it compares with some of the bigger names in the industry:
|Company||Market Cap||2020 Adjusted EBITDA||Multiple|
|Cresco Labs||$2.7 billion||
|Green Thumb Industries||$6.3 billion||
Investors aren’t paying much of a premium at all for MariMed. One of the benefits of investing in a smaller business like this is that because the company isn’t as popular and well-known as a big name like Curaleaf, there is less fanfare around it, which makes its value less likely to be inflated. And there is good value here; in 2021, MariMed anticipates another strong performance with revenue doubling to $100 million. It is expanding its presence in multiple states, including Maryland, Delaware, and Massachusetts.
In the past year, shares of MariMed are up more than 360% while the Horizons Marijuana Life Sciences ETF has risen by a more modest 68%. But the great news is that it’s still not too late to buy MariMed — its valuation remains attractive, and it could be one of the more underrated buys in the sector right now.
Trulieve is a far larger player than MariMed, having generated a whopping $521.5 million in revenue last year. Its market cap of $4.6 billion also puts it alongside the industry leaders. But despite its high valuation, you may be surprised to learn that Trulieve is still an attractive value buy. Its adjusted EBITDA in 2020 was…
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