There are now 15 states (plus Washington, D.C.) that have legalized recreational marijuana, creating a wild west of opportunities for large dispensary chains and individual growers alike. In addition, it is possible that we could see the drug receive decriminalization at a federal level under the new Biden administration. The opportunities are endless in this promising market.
That's why it's always a good idea to invest in the best marijuana companies with established track records. The entry barrier to the marijuana industry is very high as companies are often required to control the entire supply/distribution chain before states issue them a dispensary license. Let's look at how three companies have overcome the challenge and why they can make you richer in March.
1. Trulieve Cannabis
Trulieve Cannabis (TCNNF 1.14%) is the biggest provider of medical marijuana in Florida, with over 50% market share in the Sunshine State. It operates 78 stores nationwide, with over 500,000 patients and customers. The pot grower has a customer retention rate of 79% through its walk-in, pickup, and delivery services.
In 2019, Trulieve brought in $252.8 million in revenue and $132.5 million in operating income less non-cash expenses (EBITDA). Last year, its revenue and EBITDA increased to $485 million and $225 million, respectively. Right now, the stock's valuation of 13 times sales puts it at the high end of what U.S. cannabis companies are trading for.
However, given its gigantic market share and customer satisfaction, I believe Trulieve's history of spectacular growth will continue. It is rare to see a pot grower attain such a success level within just six years of operations.
2. Jazz Pharmaceuticals
At just 3.8 times revenue and 17.3 times free cash flow, Jazz Pharmaceuticals (JAZZ -0.74%) is the cheapest marijuana stock we have on our list. By the end of 2021, Jazz will complete its $7.2 billion acquisition of GW Pharmaceuticals (GWPH). GW Pharmaceuticals markets Epidiolex, a cannabinoid drug that can reduce the occurrence of seizures in patients with epilepsy by about 50%. Last year, the drug brought in $510 million in revenue, a sharp increase over the $296 million in sales it had in 2019.
What's more, Jazz is well-diversified. Outside of the cannabis venture, the company also has the No. 1 sleep disorder franchise (consisting of three drugs) in the nation. Additionally, it has five approvals in its oncology portfolio since 2015, mainly in treating small cell lung cancer. Jazz's core business brought in $2.36 billion in revenue in 2020 and it expects to increase that to $2.7 billion this year. This is definitely a well-rounded pharmaceutical cannabis company that you will not want to miss.
3. Jushi Holdings
Jushi Holdings (JUSHF 1.79%) is a premium supplier of flowers, concentrates, and CBD operating 16 stores across seven states. If that doesn't seem like a lot, don't be dismayed. The company is very good at what it's doing.
It expects to bring in up to $40 million in sales for Q1 2021 (ending March 31), representing a stunning 365% increase over the prior year's quarter. Jushi expects to further its momentum by opening an additional 10 to 12 stores in 2021.
The pot grower is well-capitalized as well, with $180 million in cash and securities and just $86 million in debt. Thus far, it also sees a 179% year-over-year increase in its e-commerce segment and welcomes up to 615 new customers to its dispensaries each day.
This year, the company expects to generate between $205 million and $255 million in revenue, compared to $80.6 million last year. Jushi is also well on its path to profitability, projecting an adjusted EBITDA of up to $50 million on top of its revenue. Its stock valuation of 11 times sales is pretty fair for that of kind growth. Hence, I would recommend avid marijuana investors add Jushi to their portfolios.