Despite the turbulent times the marijuana industry is experiencing, it consists of exciting and high-growth cannabis stocks. The industry is going through a series of ups and downs led by a lack of positive movement toward federal legalization. But that hasn't stopped the growth of domestic cannabis growers.
Illinois-based Green Thumb Industries (GTBIF 1.58%) and Massachusetts-based Curaleaf Holdings (CURLF 2.70%) reported outstanding fourth-quarter results in the first week of March. Both are in a tight race to be the top cannabis stock. Let's look at their year-end results and determine which is the better buy now.
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1. Curaleaf Holdings is spreading its roots beyond the U.S.
Acquisitions have been a driving factor in Curaleaf's growth story. The company made some smart acquisitions in the last two years that have yet to show their full potential. Its acquisition of hemp cannabidiol (CBD) company Grassroots (which closed in July 2020) helped it gain 135 dispensary licenses with 1.6 million square feet of cultivation capacity.
The company also acquired various cannabis products, manufacturers, and dispensaries in the last two years including Select, Curaleaf NJ, Arrow, MEOT, Remedy, Blue Kudu, and Alternative Therapies Group.
These strategies brought in more than $1 billion in revenue for Curaleaf in 2021. In Q4, total revenue increased 39% year over year to $320 million, while full-year revenue grew a stellar 93% to $1.2 billion from 2020.
The drastic surge in revenue also brought in a 48% and 107% year-over-year increase in Q4 and full-year adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), at $80 million and $298 million, respectively. The company added eight more stores in the quarter, bringing its total store count to 117 at the year-end. .
The company isn't profitable yet, but with stellar growth in revenue and EBITDA, profitability won't be far away. Two months into the year, the company has already opened many new stores, bringing its total to 126 nationwide. Curaleaf also completed the acquisition of Bloom Dispensaries in January, which allowed it to access the Arizona market. It could be an exciting opportunity for Curaleaf, as the state legalized recreational marijuana last year. Retail sales could ramp up in the state as a result.
Curaleaf also entered the European market with EMMAC Life Sciences Group, which is now rebranded to Curaleaf International. It ended the quarter with $299 million in cash and $436 million of outstanding debt net of unamortized debt discounts.
2. Green Thumb's net income quadrupled in 2021
Green Thumb Industries is expanding aggressively, giving strong competition to Curaleaf. Though the company has only 75 dispensaries nationwide, it holds another 114 licenses. Cannabis is illegal federally, so state regulators restrict the number of licenses they issue. Obtaining a license is a lengthy process, so the additional licenses it holds are a plus point for Green Thumb.
Green Thumb hasn't yet disclosed when and how it plans to use its licenses. When it does, the company could become a cannabis powerhouse. It's financially stable enough to carry out its expansion plans. The company's total revenue grew from $177 million to $243 million in Q4 and $894 million for the full year, an impressive surge of 60.5%. Its generally accepted accounting principles (GAAP) net income quadrupled for 2021, coming in at $75.4 million. It was Green Thumb's sixth consecutive quarter of positive net income. The company credited its robust performance to increased traffic in its 73 open dispensaries.
The quarter also marked its eighth consecutive quarter of positive cash flow from operations, which it can utilize in further expansion. Green Thumb opened 10 new stores and acquired 12 additional stores last year, and added two more stores in Virginia in 2022.
Which is the better choice?
While their Canadian counterparts struggle to grow revenues, domestic players are soaring high. Both Green Thumb and Curaleaf are excellent cannabis stocks -- investors new to the marijuana industry can start with a small investment in each. However, if you have to pick one, Curaleaf looks like a better choice. The company has established a solid footprint in the U.S. through wise, timely expansion and acquisition plans. From 54 dispensaries at the start of 2020 to 126 now, it has come a long way. With a vast national presence, it has already crossed $1 billion in revenue this year.
Whether federal legalization happens or not, Curaleaf is poised to grow as long as more states continue to legalize marijuana. It is moving to make a mark in the European cannabis market that could further boost its revenue. Experts predict this market could grow at a compound annual growth rate of 29.6% between 2020 and 2027.
Analysts see 160% upside for Curaleaf's stock in the next 12 months, which I think is possible. The stock is also trading more than 50% below its 52-week mark high, making it the right time to buy this cannabis stock at the dip.
