Many investors are making a mistake when it comes to cannabis stocks. They're focusing on well-known Canadian companies that trade on the Nasdaq or New York Stock Exchange. But the real opportunities to make huge returns are with the U.S.-based stocks that can only be bought over-the-counter right now.
If you use the Robinhood trading platform, you can't buy these stocks. However, it's worth looking for an alternate way just to buy shares of these fast-growing cannabis companies. Here are three pot stocks that could make you rich.
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Cresco Labs
Cresco Labs (CRLBF +0.17%) ranks as the biggest of the three. The multistate cannabis operator's market cap currently stands at a little under $3 billion. I think that Cresco still has plenty of growth potential.
The company's sales are in the same ballpark as those of Green Thumb Industries and Trulieve and aren't too far behind Curaleaf. However, Cresco is much more attractively valued than any of these rivals.
Granted, Cresco generates a lot more of its revenue from wholesale than its peers do. That's understandable considering the company is the leading cannabis wholesaler in the country. If you look at other industries, though, you'll find that the profit margins for wholesale tend to be greater than retail over the long term. I suspect that trend will prove true in the cannabis industry as well.
Cresco has multiple paths for growth. The states where it currently operates have booming markets. The company is also expanding into Florida's medical cannabis market with its pending acquisition of Bluma Wellness. Cresco is well-positioned to deliver exceptional returns for investors over the next few years.
Ayr Wellness
At the beginning of 2020, Ayr Wellness (AYRW.F 12.07%) had cannabis operations in two states -- Massachusetts and Nevada. Today, it's poised to be in seven states once pending acquisitions close. The company will also rank as one of the five biggest multistate cannabis operators in the U.S.
Ayr's new markets are exactly where you'd want the company to be to deliver strong growth. Florida, Ohio, and Pennsylvania have robust medical cannabis markets. Arizona opened its legal recreational marijuana market earlier this year. New Jersey recently passed legislation to legalize adult-use pot.
The company reported solid Q4 results last week, with revenue soaring 48% year over year and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) more than doubling. But it appears to be a foregone conclusion that Ayr's growth will accelerate even more in 2021 and 2022.
Ayr's shares trade at only 6.3 times sales. That's lower than any of the price-to-sales multiples of any of the other top multistate cannabis operators. With this attractive valuation combined with its strong growth prospects, Ayr Wellness looks like a fantastic pick for investors seeking to profit from U.S. marijuana momentum.
Jushi Holdings
Jushi Holdings (JUSHF 1.92%) just opened its 17th retail cannabis store. Eleven of those locations are in Pennsylvania, home to a fast-growing medical cannabis market.
The company also has operations in six other states. Jushi runs dispensaries in California and Illinois. Jushi has a CBD retail store and a hemp processing license in New York. In addition, it has cultivation and extraction operations in Nevada plus processing operations in Ohio and Virginia.
Jushi plans to open between 10 to 12 new retail cannabis locations this year. The company will still have plenty of opportunities to grow even more. It currently owns a permit for up to six retail licenses in Virginia and up to seven additional dispensaries in Pennsylvania.
At this point, Jushi isn't in the top tier of multistate cannabis operators. But the company continues to deliver strong growth. And it could be in the driver's seat in Virginia once the state's recreational marijuana market opens for business in 2024. Jushi's market cap of less than $800 million gives it a lot of room to run -- and make investors rich along the way.
