Should You Buy Cresco Labs in March?

The past 12 months have been an amazing ride for Cresco Labs (OTC:CRLBF). The Chicago-based cannabis company went from trading below $2 a share a year ago to just under $17.50 per share last month. The stock has slumped a bit since then, closing at $13.34 per share on Thursday…

What might seem like a bad omen is actually marvelous news for investors. At its current price, I think Cresco Labs is worth picking up.

A stellar quarter

The company posted great third-quarter numbers through Sept. 30, 2020. Cresco reported $153.3 million in revenue, up 63% sequentially and 323% year over year. It also had a record $46.4 million in adjusted EBITDA, a rise of 182% over the prior quarter. The company is scheduled to report fourth-quarter numbers on March 25.

Cresco cited two factors for the record third quarter. It said its wholesale revenue, aided by bigger harvests at its cultivation centers in Illinois, Pennsylvania, and California, was $90.5 million, up 64.6% sequentially. On top of that, the company’s retail revenue surged 60% to $62.8 million, thanks to two new Illinois stores and improved same-store sales.

A flurry of good deals

In the first two months of this year, Cresco Labs made two big acquisitions that should help it considerably in the long term.

Cresco announced in January that it was buying Bluma Wellness for $213 million in stock, giving it an entry into Florida with seven operating dispensaries and eight more in the works. Last month, the company added four retail dispensaries in Ohio, giving it five total in the state, with its purchase of Verdant Creations.

With its two latest deals, the company is thinking like a good chess player — several moves ahead. Cresco now has 15 production facilities, 29 retail licenses, and 24 operating dispensaries throughout nine states, including all seven of the 10 most populous states where marijuana is legal in some form, whether it be for medical or recreational use.

The company’s home base is in Illinois, where it just opened its 10th retail location and the company’s brands are sold in all of its competitors’ dispensaries in the state. Ohio and Florida are medical-marijuana-only states, with no guarantee that adult-use sales will be legalized any time soon. However, by enhancing its presence in…

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