Another round of stimulus payments for Americans is on the way, if it hasn't already landed in your bank account. And if your finances are in good shape, you have a robust emergency fund, and you can afford to invest that $1,400 chunk of change, there are plenty of attractive stocks that can double your money.
One of the best places to invest is in a high-growth sector like cannabis where many businesses are posting impressive growth numbers. Two pot stocks that are great options for risk-tolerant investors are Village Farms International (VFF -3.79%) and Trulieve Cannabis (TCNNF -6.26%). In addition to posting strong sales, their bottom lines also look good.
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1. Village Farms
Canadian-based pot producer Village Farms reported its fourth-quarter results on March 16, which was another strong performance. It marked the ninth straight period where its subsidiary Pure Sunfarms posted positive adjusted EBITDA. That's an even better streak than low-cost producer Aphria, which has posted positive results for seven straight quarters. In the fourth quarter, Village Farms' sales of $47.4 million for the period ending Dec. 31, 2020, grew by 43% year over year. The company's total adjusted EBITDA for the quarter was just shy of breakeven with a loss of $0.5 million.
But what makes Village Farms a hot buy is its ownership of Pure Sunfarms, especially now that it owns 100% (as of November 2020) of the business -- previously the ownership was split with Emerald Health. The low-cost greenhouse ensures Village Farms' financials look even better on both its top and bottom lines. Pure Sunfarms' adjusted EBITDA was a positive $13.3 million last year and its gross sales grew by 17%. And what's exciting is that there could be a lot more growth on the way as Pure Sunfarms has just begun rolling out vapes, cannabis-infused gummies, and other products.
In the past year, shares of Village Farms have soared more than 480%, outperforming the Horizons Marijuana Life Sciences ETF and its 135% returns over that time by a wide margin. But with the stock trading at a price-to-sales (P/S) ratio of around five, it still looks like a bargain compared to other cannabis stocks, including Aphria, which trades at more than 11 times its sales and Canopy Growth, which is at a multiple of more than 30. There is plenty of room for its shares to double in value, doubling investors' money in the process.
2. Trulieve
Trulieve is an exciting multi-state operator to invest in. It released its fourth-quarter earnings on March 23 and its revenue of $168.4 million for the period ending Dec. 31, 2020, grew 23.6% year over year. Impressively, it finished both the quarter and the year profitable (on a true accounting basis), reporting net income of $3 million and $63 million, respectively. Its adjusted EBITDA profit was even higher at $78.2 million for the quarter and $251 million for the entire year.
And the Florida-based company is just getting warmed up. Trulieve projects that for 2021, its sales will climb as high as $850 million. That would be 63% higher than its $521.5 million in revenue for all of 2020. It's also forecasting that adjusted EBITDA will grow by around 45% and fall between $355 million and $375 million for 2021. Trulieve is banking on strong growth thanks to expansion in a number of markets outside Florida, including Massachusetts, Connecticut, California, and Pennsylvania. In total, the company is in six states (West Virginia being the other) but 78 of its 83 locations are in Florida. There's plenty of potential as Trulieve extends its reach outside of its home state, and that is why Trulieve is such an exciting growth stock to own.
On March 22, Trulieve said it was continuing to grow its footprint in West Virginia via the acquisition of Mountaineer Holdings. The deal gives Trulieve two additional dispensary permits in that state where Trulieve will now be able to set up to six locations. And in Holyoke, MA, the company has commenced growing activities and expects to have its first harvest in the latter half of this year.
For cannabis investors, Trulieve presents a great mix of both profitability and strong growth prospects. Those are two things that are rare in the industry as fast-growing cannabis companies often incur losses. And by generating $99.6 million in cash from its operating activities last year, the company is in a solid position to fund its own growth. However, it can add to that tally, as in February it announced it filed a shelf prospectus that will allow it to raise up to 750 million Canadian dollars over a 25-month period.
Over the past 12 months, Trulieve's stock is up over 640%. With its annual revenue now up over $520 million, that puts it at a relatively modest P/S multiple of 11. The stock isn't expensive, the business is on solid ground, and with so many growth opportunities it can focus on in the coming year, 2021 could be another incredible year for this pot stock.
