The cannabis industry is still at a nascent stage, which means companies part of this sector have the potential to grow top-line at a fast clip. Any high-growth industry attracts competition, and this holds true for the cannabis segment as well.
While Canadian marijuana companies have grossly underperformed the markets ever since cannabis was legalized for recreational use, their counterparts south of the border have been on an absolute tear.
Here, we take a look at three profitable pot stocks that may continue to derive outsized returns in 2021 and beyond.
Green Thumb Industries (GTBIF)
The first pot company on the list is Green Thumb Industries, a stock that surged over 150% in 2020. In the December quarter, Green Thumb’s sales were up 134% year over year at US$177.2 million. In the first two months of 2021, the company has already generated revenue of around US$170 million.
This stellar growth in top-line has helped Green Thumb improve its bottom-line as well. In Q4 of 2020, the company’s selling and general expenses accounted for just 30% of sales compared to 62% in the prior year period. It allowed Green Thumb to increase EBITDA from US$7.8 million to US$61.3 million in this period.
In 2021, Wall Street expects Green Thumb to increase sales by 53.2% to US$852 million, while earnings are forecast to grow a stellar 528% to US$0.44 per share.
Trulieve Cannabis (TCNNF)
Another multi-state operator that makes a list is Trulieve Cannabis, which has 83 retail locations in the U.S., out of which 78 are in Florida. Trulieve enjoys a leadership position in the Sunshine state, allowing it to lower costs and optimize the supply chain by focusing on one region.
Trulieve’s sales in 2020 were up 106% at US$521.5 million. Comparatively, its EBITDA stood at US$78.2 million. The fourth quarter of 2020 was Trulieve’s 12th consecutive quarter, where the company reported a positive EBITDA.
Analysts tracking the company expect Trulieve sales to grow by 63.6% to US$853 million, while earnings are estimated to grow by a robust 134% to US$1.24 per share.
Innovative Industrial Properties (IIPR)
Another profitable cannabis-focused company that should be on your radar is Innovative Industrial Properties. It is not a marijuana producer but a real estate investment trust with pot companies as its tenants under a triple-lease agreement.
In 2020, IIPR increased its revenue to US$116.9 million from just US$44.66 million in 2019. Comparatively, its operating income rose from US$24.9 million to US$69.7 million in this period. Its stellar profit margins allow IIPR to pay annual dividends of US$5.28 per share to investors, indicating a forward yield of 3%.
In 2021, Wall Street expects IIPR sales to rise by 71% to US$200 million, while earnings are expected to rise by 47% to US$4.8 per share.