Cannabis Stocks Post Strong Q2 Growth
Ryan Allway
September 3rd, 2020
News, Top Story
The COVID-19 pandemic has disrupted large swaths of the economy, but some sectors have outperformed others. In particular, the cannabis industry has behaved more like a consumer staple than a discretionary good with robust demand throughout the pandemic. The result has been a rebound across many cannabis stocks that had seen earlier depressed valuations.
Let’s take a look at the underlying consumer demand picture, how cannabis companies have performed and where investors can look for opportunities ahead, including emerging multi-state operators like Red White & Bloom Brands Inc. (CSE: RWB) (OTC: RWBYF).
Strong Sales Growth
Several cannabis markets experienced robust sales growth during the second quarter. According to BDSA, Arizona sales rose 48%, Oregon sales rose 38%, Colorado sales rose 19% and California sales rose 11% during the first half of the year. The Midwest has also been strong with Illinois sales reaching $380 million between January and July of 2020.
Canaccord Genuity analysts raised its 2020 cannabis sales estimates from $14.7 billion to $15 billion in order to reflect these strong trends. By 2024, the analyst expects the market to grow at a 20% compound annual growth rate to reach $31 billion in sales, based on the belief that several states will quickly create recreational programs to close budget gaps.
Click here to receive an investor deck and corporate updates
These trends have translated to strong financial results for cannabis companies, which reported second quarter earnings that were largely in-line or beats. Forward earnings estimates increased by an average of seven percent among public firms, according to MJBizDaily, driven by massive beats and strong guidance from GrowGeneration (GRWG) and Curaleaf (CURA).
Red White & Bloom Brands Inc. (CSE: RWB) (RWBYF), a multi-state operator with assets throughout the United States, recently reported $1.5 million in revenue and gross margins of 82% in its first quarterly financial report since its debut. Adjusted EBITDA hit $6.5 million for the quarter, but that excludes the Platinum Vape and PharmaCo acquisitions, which are expected to add about C$170 million in annual revenue for a total nearing C$200 million.
Cannabis companies in the United States have historically traded at a discount to their Canadian peers due to the uncertain regulatory situation. However, after reporting second quarter earnings, domestic stocks rose by an average of 15% compared to an 8% decline among Canadian peers, suggesting a closing of the valuation gap.
Click here to receive an investor deck and corporate updates
Where to Invest in Cannabis
Many cannabis companies have seen their valuations rise to Canadian peers on the top line, but many stocks still trade at a discount to their EBITDA. According to MJBizDaily, domestic companies trade with an average EBITDA margin of 28% compared to breakeven levels in Canada, which lead to a lower valuation of 15X 2021 EBITDA compared to 29.5X in Canada.
Multi-state operators, or MSOs, could be especially compelling given their improved diversification and scale. For instance, Red White & Bloom Brands Inc. (CSE: RWB) (OTCQB: RWBYF) is positioning itself as a top-three MSO in the U.S. legal cannabis and hemp sector with assets targeted at Michigan, Illinois, Massachusetts, California and Florida. The company trades with a fully diluted enterprise value of $325 million despite nearly C$200 million in projected revenue following the integration of its two acquisitions.
The company has already built an impressive footprint in three states—Michigan, Illinois and Massachusetts—with ten operating dispensaries, eight additional dispensaries ready to open, and a goal to open 35 dispensaries by Q4 2020. In addition, the company has 468,000 sq. ft. of operating cultivation and 3.6 million sq. ft. of CBD cultivation.
In 2020, management anticipates generating $166 million in revenue and $57.5 million in EBITDA through its existing operations and near-term growth plans. The company also continues to build its High Times dispensary brand throughout the Midwest, combining an operation with 350,000 transactions per year with the world’s most iconic brand.
Looking Ahead
The COVID-19 pandemic has depressed large swaths of the US economy, however, the cannabis sector has proven extremely resilient. Red White & Bloom Brands Inc. (CSE: RWB) (OTC: RWBYF) is well positioned to capitalize on these growth rates given its diverse presence across three states, unique branding and growing supply chain.
For more information, visit the company’s website at www.redwhitebloom.com or sign up to download the company’s investor presentation.
Resources
Disclaimer
The above article is sponsored content. CannabisFN.com and CFN Media, have been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://cannabisfn.com/legal-disclaimer/
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
Search CannabisFN
Press Coverage
Psychedelics Index
Top Videos
Alan Brochstein’s 420 Investor is the go-to community for investors to learn, explore, and profit from the marijuana companies. The main goal of 420 Investor is to provide real-time, objective information about the top marijuana companies in the market in order to help investors capitalize on cannabis.
Rob is the co-founding President of Pelorus Equity Group and has more than 18 years of experience in the real estate finance industry. Since the formation of Pelorus in 2010, he has raised more than $175,000,000 in secured real estate transactions. Rob’s primary role at Pelorus Equity Group is the development of strategic alliances with […]
Helix TCS, Inc. (OTCQB: HLIX) provides software and technology platforms for the cannabis industry.
Founded in the spring of 2014, Genius Extraction is owned and operated by its creators, Robert and Brenna Gaither. While Robert brings his sales prowess to the endeavor, Brenna’s strong background, education, and training in biochemistry establish the foundation for the company’s credibility in the extraction industry. With a strong understanding of the extraction industry’s […]
Network Partners
About CFN Media Group
CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.
Copyright © Accelerize Inc. · All Rights Reserved · Privacy Policy · Legal Disclaimer
