Cannabis stocks have had a fairly disappointing time over the course of the past year or so, and some of the better-known companies have seen their stocks record considerable declines. Green Thumb Industries Inc. (CSE:GTII) (OTCQX:GTBIF) has not been an exception in this regard, and its stock has been beaten down during this period due to the slew of factors affecting the industry.
Major Things to Watch
Considering the fact that the black market continues to record mammoth sales, it could be worthwhile for investors to take a closer look at the American multi-state operator. Here is a look at some factors why Green Thumb could well be a hidden gem from among cannabis stocks.
The most important factor in favor of Green Thumb is the fact that it operates in the United States, which remains the largest cannabis market worldwide if one considers yearly sales. Hence, if cannabis is legalized across the country, then the upside for companies like Green Thumb could be immense.
In addition to that, unlike Canada, there are no delays when it comes to awarding dispensary licenses in the United States. On the other hand, Green Thumb is one of the better-capitalized companies in the industry despite, and that is a significant competitive advantage in the industry.
The company ended March 2020 with cash and cash equivalents of $71.5 million. At this point, Green Thumb has debts of $92.9 million. However, only $0.2 million of those debts are going to be due in 12 months’ time. On the other hand, the company has also taken advantage of sale-leaseback agreements to raise cash and refused to dilute its share so far. It is also necessary to point out that the company’s products seem to be making a mark as well. In the fiscal first quarter, it generated sales of $102.6 million, which reflects a year on year rise of 268%. Positive EBITDA for the period stood at $25 million.
The company operates 44 dispensaries at this point, but it has licenses to open 56 more. Since marijuana is expected to be a high growth industry in the coming years, Green Thumbs is a stock that could make investors rich in the long term.