Potential investors who look at Jushi Holdings (JUSHF -5.64%) today might think it's too late to get in on this stock, given its 270% returns over the past 12 months (the Horizons Marijuana Life Sciences ETF is up just 28%). However, multiple brokerages have set price targets of more than $8 for Jushi, which represents an upside of over 50% from its current price of about $5.20.
Price targets always change, and it wouldn't be surprising if Jushi were eventually to soar well above $8. Even doubling from where it is now wouldn't be all that unrealistic. With some solid numbers and attractive growth opportunities ahead, Jushi could be an underrated buy.
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New market opportunities will unlock more growth
The recent price targets for Jushi were made in February. Since then, the company has entered Massachusetts, where both medical and recreational marijuana are legal, through a $110 million acquisition of cannabis cultivator and retailer Nature's Remedy.
The move expands Jushi's presence to seven states. And Massachusetts is one of the hottest markets in the country, with analysts projecting it could be worth more than $1 billion in 2021.
What's also promising is that the company also has a foothold in a couple of attractive markets that haven't legalized marijuana for recreational use yet -- Pennsylvania and Ohio. With many surrounding states permitting adult-use pot, it may be only a matter of time before those two Northeastern states follow suit.
Impressively, Pennsylvania generated more than $800 million in marijuana revenue last year and was among the top 10 cannabis markets in the country, despite not selling any recreational products. But some reform is happening, as Pennsylvania's governor recently signed a bill that expanded the state's medical marijuana program, giving patients greater access to cannabis.
In Ohio, lawmakers introduced a bill this month that would legalize pot for recreational use. The Buckeye State isn't as large, but analysts expect it could generate more than $400 million in medical marijuana revenue for 2021.
In addition to creating new opportunities for Jushi, reform in these two markets could also drive a lot of bullishness from cannabis investors who may be looking to gain exposure to these states. Pennsylvania is a particularly important market for Jushi, as 13 of its 20 Beyond/Hello dispensaries are located there.
Jushi has been generating great numbers
The company last released its earnings on June 9. Sales of $42 million for the period ending March 31 were up 29% from the previous quarter. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) profit of $3 million was also 15% higher.
Jushi is coming off a big growth year; its sales of $81 million in 2020 were 8 times the $10 million it recorded in the previous year. By ramping up operations and operating more stores, the company delivered a strong performance that attracted many growth investors.
Simply building off its existing operations could make Jushi an attractive buy. The company anticipates that its sales next quarter will come in between $45 million and $48 million, continuing to expand on its most recent results. At a forward price-to-sales multiple of less than 4, it's cheaper than many of the other large multistate operators in the country:
JUSHF PS Ratio (Forward) data by YCharts
Investors are likely more willing to pay a premium for more established and diverse businesses. This means that as Jushi grows in size, and especially if the Ohio and Pennsylvania recreational pot markets open up, the stock could command a much larger premium.
Jushi has risen significantly in value over the past year, but at $880 million in market cap, it's still a fairly small cannabis company. Trulieve Cannabis recently announced plans to acquire multistate operator Harvest Health & Recreation, and at a market cap of $1.6 billion, that company is close to twice Jushi's size.
For a multistate operator looking to expand its presence, Jushi itself could make for an attractive acquisition target, which is another way it could generate some strong returns for investors.
Should you buy Jushi stock today?
Year to date, shares of Jushi are down more than 13%, while the Horizons Marijuana Life Sciences ETF has risen by 18%. Now could be an opportune time to buy the stock on the dip. Given the potential opportunities for the relatively small Jushi to grow over the years, this is one of the better marijuana investments you can secure today.
However, it may require a bit more patience than other marijuana stocks, given that the lack of a fully legal Pennsylvania pot market is likely holding it back right now. But if you're prepared to buy and hold for a few years, Jushi could potentially double in value through a combination of increased sales numbers and the surge it will likely benefit from once Pennsylvania legalizes recreational pot.
