Better Marijuana Stock: GrowGeneration vs. Trulieve Cannabis

GrowGeneration (NASDAQ:GRWG) and Trulieve Cannabis (OTC:TCNNF) rank as two of the hottest stocks in the cannabis industry so far this year. Shares of GrowGeneration have soared 270%, while Trulieve’s shares are up close to 60%…

Trulieve is still nearly three times bigger than GrowGeneration. But which of these marijuana stocks is the better pick for long-term investors? Here’s how GrowGeneration and Trulieve stack up against each other.

The case for GrowGeneration

GrowGeneration isn’t really a pure-play marijuana stock. However, it certainly qualifies as a picks-and-shovels play for the cannabis industry. GrowGeneration operates the largest chain of specialty hydroponic and organic garden centers in the U.S. Many of its customers are cannabis operators.

Business is booming for the company. GrowGeneration reported all-time high revenue in the second quarter of $43.5 million, up 123% year over year. It’s profitable as well, with earnings jumping 142% to nearly $2.6 million.

Can GrowGeneration keep this momentum going? Probably so. Cannabis markets are growing in the 10 states where the specialty retail already operates. These states include California, which ranks as the largest legal cannabis market in the U.S., and Florida, where medical cannabis sales are soaring.

GrowGeneration has ambitious expansion plans as well. It currently operates 28 stores. The company hopes to have 50 stores open in 15 states next year.

Probably the biggest knock against GrowGeneration is its valuation. Shares currently trade at more than 58 times expected earnings. However, that metric should be viewed in the context of GrowGeneration’s huge growth prospects.

The case for Trulieve Cannabis

You could probably call Trulieve Cannabis the 800-pound gorilla of Florida’s medical cannabis market. The vertically integrated cannabis operator claims roughly half of the market and continues to grow.

Trulieve generated record revenue of $120.8 million in Q2, up 26% quarter over quarter and more than doubling the revenue total in the prior-year period. It recorded earnings of $6.6 million, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $60.5 million.

There’s no doubt about Trulieve’s ability to continue growing over the near term. The company’s Q2 results were based on 50 cannabis stores in operation. Trulieve now has 61 dispensaries. And it’s on track to exceed the corporate goal of 68 stores.

While Florida will remain Trulieve’s primary market, the company has expanded into other regions. Trulieve…

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