Sundial vs. Green Thumb: Which Cannabis Stock is a Better Buy?

Canadian cannabis stocks have grossly underperformed the markets for the past two and a half years.  However, U.S.-based multi-state operators have experienced impressive gains…

Though marijuana is still illegal at the federal level in the U.S., several states have legalized recreational cannabis in the last few months, and a majority of the regions already allow medical marijuana products. The cannabis market is expectedly much larger in the U.S. compared to Canada. Further, U.S. cannabis producers are benefiting from economies of scale and are racing towards profitability while Canadian companies are grappling with massive losses and rising inventory levels.

Today I’ll analyze two such cannabis producers, Sundial (SNDL – Get Rating) and Green Thumb (GTBIF – Get Rating), to see which is a better stock right now.

Sundial stock is down 94% from record highs

Sundial stock went public on the NYSE in the second half of 2019. Since August 2019, SNDL stock has lost 94% in market value and has burnt massive investor wealth in the process. In the first quarter of 2021, Sundial’s cannabis sales were down over 30% year over year. It reported a gross loss, making investors nervous.

Sundial sales fell from $75.8 million in 2019 to $61 million in 2020. In the last 12-month period, total revenue stands at $56.8 million. Now, in order to improve the bottom line, Sundial is looking to reduce its product portfolio and focus on high-margin items.

Further, to improve its liquidity position, Sundial has raised equity capital multiple times in the last two years. Its total outstanding shares have more than doubled year to date to 1.86 billion valuing the stock at a market cap of $1.48 billion.

Its shareholder dilution has been staggering but this has also allowed Sundial to end Q1 with a cash balance of $753 million with no debt. Sundial sales are forecast to fall by 10.6% to $45.15 million in 2021 and then rise by 55% to $70.2 million in 2022.

Green Thumb stock is up 262% in the last three years

Green Thumb Industries is one of the largest cannabis companies in the world and is valued at a market cap of $6.55 billion. This marijuana heavyweight has managed to increase its sales from $62.49 million in 2018 to…

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