If you're looking for marijuana stocks with the potential to double your investment this year, Harvest Health & Recreation (HRVSF +0.00%), Curaleaf Holdings (CURLF +2.61%), and Planet 13 Holdings (PLNH.F +0.75%) are good places to start. They all have significant tailwinds, are showing outstanding revenue growth, and are well-situated to grow their businesses this year.
There's still plenty of risk in marijuana stocks, with some wild price swings in stock shares, but these companies have strong financials and momentum to back up investors' enthusiasm.
I also like that all three have a clear vision into who they are. Curaleaf sees itself as a dominant national player, particularly in the Northeast. Harvest Health is looking to use its dominance in Arizona to replicate success in other states with limited licenses, and Planet 13 is unique in its SuperStore approach in Nevada and, soon, in Southern California.
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Harvest Health & Recreation is poised to take off
Harvest Health & Recreation is in a great spot right now. It operates 15 of Arizona's 123 dispensaries, and the state just opened up to adult-use sales on Jan. 22. In the small window of time between that date and the end of February, the company said its revenues increased "between 45% and 248%" compared to the fourth quarter. That's just a hint of things to come.
The company's shares are up more than 270% over the past year and more than 37% this year, but the real reason to get excited about this stock is its fundamentals.
Fourth-quarter sales were a reported $69.9 million, up 85% year over year and 13% sequentially. The company also reported $9.1 million in adjusted EBITDA, its second consecutive quarter of positive EBITDA.
Harvest Health is also investing heavily in Florida, Pennsylvania, and Maryland. All three only allow medical marijuana sales for now, but as in Arizona, that likely will change. By that time, Harvest Health should have solid positions in those states.
Curaleaf's size gives it an advantage
Curaleaf's revenue was a reported $626.6 million last year, up 186% year over year, which it says makes it the largest cannabis company in the United States by revenue. It's not profitable yet, but it's certainly getting there after growing EBITDA 17% last year and with seven consecutive quarters of positive adjusted EBITDA. In the fourth quarter, it posted adjusted EBITDA of $53.8 million, compared to $13.8 million for the fourth quarter of 2019. Revenue in the fourth quarter was a record $230.2 million, up 26% quarter over quarter and 184% year over year.
It's one of the biggest multistate cannabis operators, with 101 dispensaries -- and licenses for 135 -- across 23 states, but like Harvest Health, it is focusing on states with limited licenses: Arizona, Florida, Illinois, Massachusetts, New Jersey, New York, and Pennsylvania. It is headquartered in Wakefield, Mass., and is especially strong in the Northeast, where it says it is No. 1 in market share in New York, New Jersey, Pennsylvania, Connecticut, Vermont, and Maryland. It's also No. 2 behind Harvest in Arizona.
Its shares are up more than 284% over the past 12 months and more than 24% this year. It also has ambitious expansion plans, as its recent $286 million deal to buy European marijuana company Emmac Life Sciences shows. It gives the company an entry point into a market that is more than twice the size of the United States.
Planet 13 is about to enter a new orbit
Planet 13 is a much smaller company than the prior two, but it is highly visible in Nevada, with nearly 10% of the state's marijuana sales. The company was hampered significantly last year because the pandemic did a number on Las Vegas's tourist market, with 19 million visitors in 2020, compared to 42 million the year before, according to a statista.com report.
Adjusted EBITDA, therefore, was $8.9 million, down from $10.2 million in 2019, though the company did show 10.8% revenue growth with a reported $70.5 million in annual revenue.
The company's shares are up more than 647% in the past 12 months and more than 30% this year. Now that the state is seeing tourism rebound, Planet 13 should really benefit. In March, the company posted a monthly record of $9.7 million in revenue. For the first quarter, the company said it had revenue of $23.8 million, up from $16.8 million in the same period in 2019.
It is adding 7,000 square feet of retail space to its 112,000-square-foot SuperStore on the Vegas Strip, which the company says is the largest marijuana dispensary in the world. In February, it began construction on a 55,000-square-foot SuperStore in Santa Ana, Calif. Like the Las Vegas SuperStore, the one in Orange County will be an entertainment complex with a restaurant and space for other stores and is expected to be finished in July.
It's hard to make a bad choice
Of the three marijuana stocks, I like Harvest Health and Planet 13's possibilities the most this month because I feel like they have more room to grow over the next year. However, thinking long-term, Curaleaf is still the obvious choice because of its scale and resources.
This is going to be a big year for the industry, and all three of these companies have an opportunity to put distance between themselves and their competitors. There's no guarantee their shares will continue to rise at the rate they have, but all three are in a good position to justify continued share growth.
