Please ensure Javascript is enabled for purposes of website accessibility

2 Under-the-Radar Cannabis Stocks You'll Like Even Better Than Sundial Growers

By Keith Speights - Mar 5, 2021 at 5:01AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These stocks are slam dunks compared to Sundial.

Reddit users have helped make Sundial Growers (SNDL 2.02%) a red-hot pot stock in 2021. Shares of the Canadian cannabis producer are trading up by almost 170% year to date. And at one point, Sundial had skyrocketed by more than 520%.

Some investors may be thinking about jumping aboard the bandwagon in hopes that Sundial will resume that staggering upward climb. If you're in that group, my recommendation is that you broaden your horizons. Here are two under-the-radar cannabis stocks that I suspect you'll like even better than Sundial Growers.

Cannabis plants growing under lights

Image source: Getty Images.

1. Ayr Wellness

Ayr Wellness (AYRW.F -0.80%) is a U.S.-based multistate cannabis operator that recently changed its name from Ayr Strategies. The company initially focused only on the Nevada and Massachusetts markets, but is rapidly expanding into additional states.

Unlike Sundial, Ayr is already generating positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). It's also generating impressive revenue growth. In the third quarter, its revenue soared 61% quarter over quarter to $45.5 million.

We'll have to wait until next week to learn how Ayr fared in Q4. I expect, though, that it will again deliver tremendous growth. And whatever numbers Ayr reports, they'll represent only the tip of the iceberg when it comes to this company's potential.

Ayr recently opened new locations in Las Vegas and in Pennsylvania. It will soon launch retail stores targeting the adult-use cannabis market in Massachusetts, where the company is already selling wholesale to 60 of the state's 81 adult-use dispensaries. 

The company also has been on a shopping spree. Its acquisitions will enable Ayr to enter Arizona, Florida, and Ohio. Arizona's adult-use cannabis market just opened, while Florida and Ohio have thriving medical cannabis markets. 

Ayr Wellness beats Sundial Growers in terms of current growth as well as near-term (and arguably long-term) growth prospects. It's in a much stronger financial position as well. You might think, therefore, that Ayr stock would be more expensive than Sundial Growers. It isn't. Sundial's market cap currently is nearly three times greater than Ayr's market cap. 

2. Jushi Holdings

Jushi Holdings (JUSHF 4.93%) is another U.S. multistate cannabis operator that shines in comparison to Sundial Growers. The company currently operates 16 retail cannabis stores in four states.

Like Ayr Wellness, Jushi has been generating sizzling growth. In Q3, it reported revenue of $24.9 million, up 67% quarter over quarter. Jushi also posted positive adjusted EBITDA of $1.9 million -- the first time in the company's history it has delivered a profit by that metric. And it's is poised to more than double its sales in 2021. (Indeed, it potentially could triple them.)

Also like Ayr, Jushi is expanding its business -- especially in California, the biggest legal cannabis market in the U.S. The company is acquiring a dispensary in Palm Springs and a retail license holder in Grover Beach. Jushi is also moving forward with plans to build a retail store in Culver City.

Jushi began operations last year at its 93,000-square-foot facility in Manassas, Virginia. It also launched the first of six medical cannabis dispensaries in the state in December. Virginia is likely to become a much bigger market for Jushi in the not-too-distant future. The state's lawmakers recently passed a bill that would legalize adult-use marijuana beginning in 2024. 

This might sound a little like deja vu, but Jushi trounces Sundial Growers on nearly every front. Its revenue is nearly 2.5 times greater than Sundial's. It's growing much faster. It's already generating positive adjusted EBITDA, which Sundial isn't. And Jushi's pathway to more growth appears to be a lot smoother than Sundial's.

So are investors giving Jushi a premium valuation compared to Sundial? Nope. Sundial's market cap is close to 2.4 times greater than Jushi's. Whatever you might think about Sundial stock right now, it's clear that Jushi is the better pick.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ayr Wellness Inc. Stock Quote
Ayr Wellness Inc.
AYRW.F
$4.92 (-0.80%) $0.04
Sundial Growers Inc. Stock Quote
Sundial Growers Inc.
SNDL
$0.33 (2.02%) $0.01
Jushi Holdings Inc. Stock Quote
Jushi Holdings Inc.
JUSHF
$1.49 (4.93%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.