The growing support for decriminalization of marijuana at the national level, expanding state-level legalization, and growing acceptance of medicinal and recreational products derived from marijuana are key factors driving the cannabis industry’s growth. Furthermore, the global legal cannabis market is expected to reach $91.5 billion by 2028, representing a 26.3% CAGR.
Investors’ confidence in the cannabis space is evidenced by the Global X Cannabis ETF’s (POTX) 27.4% returns over the past year. Furthermore, the rising popularity of cannabis for its therapeutic uses and increasing demand for anxiety drugs should bolster the pot industry’s growth.
Given this backdrop, Cantor Fitzgerald expects quality pot stocks Tilray, Inc. (TLRY), Cresco Labs Inc. (CRLBF), and Charlotte's Web Holdings, Inc. (CWBHF) to rally by 35% or more in price in the coming months.
Click here to check out our Cannabis Industry Report for 2021
Tilray, Inc. (TLRY)
The global cannabis lifestyle and consumer packaged goods company, TLRY, operates through five segments-- Cannabis Business; Distribution Business; Beverage Alcohol Business; Wellness Business; and Business Under Development. The Nanaimo, Canada, company also offers pharmaceutical and wellness products, beverage alcohol products, hemp-based food, and other wellness products.
This month, TLRY’s Canadian subsidiary expanded its partnership with a local Quebec company, ROSE LifeScience Inc. Through this partnership, ROSE will be representing TRLY’s entire portfolio from ultra-premium options to accessible value brands from across Canada. It expects to experience strong business growth with this expanded partnership.
TLRY’s revenue increased 25.3% year-over-year to $142.24 million for its fiscal fourth quarter, ended May 31, 2021. The company’s net income was $33.61 million, versus a $84.31 million net loss in the prior-year quarter. Its EPS came in at $0.18, compared to a $0.39 loss per share in its fiscal fourth quarter of 2020. Also, the company’s cash and cash equivalents grew 35.4% from the year-ago value to $488.47 million.
Analysts expect TLRY’s revenue for its fiscal year 2022 to be $800.62 million, representing 56% year-over-year growth. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Its EPS is expected to increase 81.5% in price in the current year.
A Cantor Fitzgerald analyst rated the stock a buy. Closing Friday’s trading session at $11.67, his $18 price target represents a 54.2% potential upside.
Cresco Labs Inc. (CRLBF)
CRLBF is a Chicago-based cultivator, manufacturer, marketer, and vertically integrated cannabis company. CRESCO, RESERVE, Remedi, MINDY’s, GoodNews, High Supply, Wonder, Sunnyside, and Floracal are the brands under CRLBF. It offers cannabis in flowers, chocolates, live resins, vape pens, sublingual oils, and many other forms.
CRLBF acquired 100% of Cure Pennsylvania (“Cure Penn”) for approximately $90 million this month. As part of this agreement, CRLBF acquired three Cure Penn Dispensaries, which will be incremental and complementary to the four CRLBF’s Sunnyside dispensaries in Pennsylvania.
During the second quarter, ended June 30, 2021, CRLBF’s revenue increased 122.8% year-over-year to $209.98 million. The company’s gross profit grew 217.7% from its year-ago value to $100.98 million. Its income from operations came in at $14.87 million, versus a $20.94 million loss from operations in the prior-year quarter. Also, the company’s net income amounted to $2.65 million, compared to a $41.7 million net loss in the second quarter of 2020.
A $864.89 million consensus revenue estimate for its fiscal period ending December 2021 represents an 81.6% increase year-over-year. Its EPS is estimated to grow 94% in the current year. Also, its stock has gained 61.7% in price over the past year.
Cantor Fitzgerald expects the stock’s price to hit $12.65, representing a 36.8% potential gain from its $9.25 last closing price.
Charlotte's Web Holdings, Inc. (CWBHF)
Incorporated in 2018, CWBHF is a hemp extractor and distributor. The Boulder, Colo.-based concern offers products in the categories of tinctures, capsules, gummies, topicals, and pet products. The company markets its products through e-commerce websites, various retailers, health practitioners, and third-party websites.
This month, CWBHF introduced three new gummies--Daily Wellness, THC-Free, and Immunity gummies. These products will be available on its e-commerce website and shipped to 14,000 retailers across the U.S. CWBHF’s revenue increased 11.5% year-over-year to $24.2 million for the second quarter ended June 30, 2021. The company’s gross profit grew 37.4% from its year-ago value to $15.8 million. Its operating expenses decreased 15.3% from the prior-year quarter to $25 million. In addition, the company’s net loss declined by 62.5% year-over-year to $5.4 million.
For its fiscal year 2022, CWBHF’s revenue is estimated to be $139.67 million, representing 36.5% year-over-year growth. In addition, analysts expect the company’s EPS to increase by 90.9% next year.
Currently trading at $2.04, the Cantor Fitzgerald analyst’s $3.50 price target represents a 71.6% potential upside.
Click here to check out our Cannabis Industry Report for 2021
TLRY shares were trading at $11.93 per share on Monday morning, up $0.26 (+2.23%). Year-to-date, TLRY has gained 44.43%, versus a 19.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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