You have to give props to Sundial Growers (SNDL -4.27%) and Tilray (TLRY -10.70%) for their impressive share-price gains so far this year. Both Canadian pot stocks captured the attention of online communities and rode the wave to become huge winners.
Sure, Sundial and Tilray aren't close to their peaks set earlier in 2021. However, they're miles ahead of one of the biggest and best-performing U.S. marijuana stocks -- Trulieve Cannabis (TCNNF 1.30%).
But if I had to pick between these stocks right now, it would be an easy choice. I'd go with Trulieve without a moment's hesitation. Here are three ways Trulieve trounces both Sundial and Tilray.
1. Sales growth
One of the best ways to determine how well a cannabis producer is performing is to check out its sales growth. On this front, there's basically no comparison between Trulieve and either Sundial or Tilray.
Sundial's net revenue from cannabis fell 29% year over year in the first quarter of 2020 to 9.9 million Canadian dollars (around $8.2 million). The good news for the company was that it generated interest and investment revenue totaling CA$15.7 million (roughly $13 million).
Tilray reported total revenue of $56.6 million in Q4 (the most recent quarter before its merger with Aphria), up 20.5% year over year. Aphria's net revenue rose 6.4% year over year in its fiscal third quarter to CA$153.6 million (in the ballpark of $127 million).
Meanwhile, Trulieve's revenue more than doubled year over year in Q1 to $193.8 million. Most of this growth stemmed from organic expansion in the company's home state of Florida. Trulieve's revenue jumped 15% from the previous quarter, better than the year-over-year cannabis revenue growth for Sundial and Aphria and not much lower than the growth for Tilray.
Sundial surprised investors in Q1 with positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). However, the Canadian company still posted a huge net loss of CA$134.4 million.
Tilray also achieved positive adjusted EBITDA in its latest quarterly results. Like Sundial, though, the company remained unprofitable, with a net loss of $3 million. Aphria was able to brag about its eighth consecutive quarter of positive adjusted EBITDA in fiscal Q3. Those bragging rights couldn't extend to the bottom line, however: Aphria's net loss totaled nearly CA$361 million.
What about Trulieve? It reported Q1 adjusted EBITDA of $90.8 million -- nearly six times greater than the latest quarterly adjusted EBITDA for Sundial, Tilray, and Aphria combined. And Trulieve also posted a profit of $30.1 million.
3. Future prospects
Trulieve's greatest advantage, however, is that it has stronger future prospects than either Sundial or Tilray. No other rival comes close to Trulieve in Florida's medical cannabis market. The company is just getting started with its operations in Pennsylvania, California, Connecticut, and West Virginia.
More importantly, though, Trulieve's acquisitions are about to transform the company in a major way. It expects to close the purchase of Harvest Health & Recreation later this year. The deal will open up markets in five additional states and boost Trulieve's total addressable market by more than 50%.
Sundial and Tilray continue to face challenging dynamics in the Canadian recreational marijuana market. Both companies hope to get an opportunity to expand into the U.S. cannabis market, but hope is about all they can do right now. Neither Sundial nor Tilray can retain their listings on major U.S. stock exchanges and operate in the U.S. cannabis market as long as marijuana remains illegal at the federal level.
Granted, those federal laws could change. Even if they do, though, Sundial and Tilray aren't in as strong of a position to benefit as Trulieve is.
One more advantage
I think that higher revenue growth, consistent profitability, and stronger future prospects should be more than enough to convince most investors that Trulieve is the better pick than either Sundial or Tilray. But there is one more advantage that Trulieve offers: a more attractive valuation.
Trulieve stock currently trades at a price-to-sales multiple of 7.6. That's well below Sundial's P/S ratio of nearly 12.8 and Tilray's P/S ratio of close to 9.1.
My view is that the primary reason behind this lower valuation is that Trulieve's shares are only available to U.S. investors over the counter. That could change in the not-too-distant future, however. I think that Trulieve is in a great position to trounce the stock performances of Sundial and Tilray over the long run.