Marijuana stocks have seen an impressive run-up as of late. The sector benchmark, the Horizons Marijuana Life Sciences ETF (HMMJ -0.69%), is up 76% year over year, far outperforming the S&P 500's 39% gain. Investor hype is stemming from the gradual legalization of cannabis across state lines, along with the possibility of a federal decriminalization of the drug under the Biden administration.
A shifting political situation has created a market worth upward of $18 billion -- and growing. So let's look at why three players in the maverick industry, Planet 13 Holdings (PLNH.F -0.08%), Curaleaf (CURLF 3.31%), and Trulieve (TCNNF -2.99%), are all top marijuana stocks for investors to place on their watchlists.
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1. Planet 13 Holdings
On July 1, Planet 13 opened its much-anticipated cannabis superstore at the heart of Orange County in California, just a short drive away from Disneyland. The store is the largest in the state, featuring an indoor digital waterfall and beach-themed exhibits.
The company hopes that the Orange County superstore can replicate its success at its flagship in Las Vegas. Planet 13 Vegas is at the center of the Strip, among popular resorts and casinos. In just the month of May, the company announced record sales of $11.2 million due to high levels of tourist traffic -- which is more than what it brought in for the entirety of the second quarter of 2020.
The stock may seem expensive at 9.3 times sales, but get this -- Planet 13 is already on track to more than double its revenue with its two Nevada stores. A successful Orange County opening could send the company's financials flying past expectations. Compared to last July, its shares are up 304%, and it is a solid buy even at its highs.
2. Curaleaf
What better way to invest in marijuana stocks than to place one's bets on the biggest cannabis company in the world? You heard that right -- Curaleaf, which operates 106 dispensaries across 23 states, brought in $260 million in sales and $63 million in operating income less noncash items (EBITDA) in the first quarter of 2021. Revenue grew by a stunning 170% year over year.
Opening dispensaries in high-density population areas isn't the only strategy at which Curaleaf excels. The company also wholesales its pot at over 2,000 locations. What's more, Curaleaf was the first marijuana chain in the U.S. to expand its operations to Europe. Curaleaf International possesses licenses for eight hectares of cannabis cultivation across the U.K., Germany, Italy, Switzerland, and Portugal.
Curaleaf stock is trading for 7.5 times sales despite all its potential, which is pretty low considering its triple-digit percentage revenue growth. It is one of the top marijuana stocks to buy now for these reasons. The stock has returned 136% over the past year.
3. Trulieve
By the end of the third quarter, Trulieve will combine with Harvest Health (HRVSF) to form the most profitable cannabis operator in the country (in terms of EBITDA). The deal will create three major cannabis hubs in 11 states totaling 126 dispensaries. Eighty-three of those are located in Florida, where Trulieve possesses a 48% share of the medical cannabis market. In addition, the company operates a statewide delivery program at many of its locations. Customer retention rates in these stores often exceed 80%.
Trulieve expects to generate $1.2 billion in revenue and $461 million in EBITDA for the two entities combined for the full year. That's a significant improvement from the $752.5 million in sales Trulieve-Harvest had in 2020. It is the least expensive stock of the three, trading at just 5.2 times revenue going forward. The stock is up over 190% from the same time last year.
