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Seeking the Top Pot Stocks? (GTBIF, SGMD, MJNA, TCNNF)

In search of the next superstar opportunity in the red-hot cannabis stock space? We are here to help with a short introduction to a few interesting and active names in the space.

The cannabis theme has been a roller coaster… no doubt about it. But the game has an obvious endpoint. The long-term thesis looks the same from any angle: you’d be hard-pressed to find anything anywhere that has the same growth potential simply because you are necessarily seeing something somewhere on the track from a small niche market to a mainstream household market as the legalization trend progresses inexorably. 

That’s a very strong macro foundation for speculators in search of high-growth opportunities. With that in mind, we survey a few of the highly active names with interesting stories here, including: Green Thumb Industries Inc (OTCMKTS:GTBIF), Sugarmade Inc (OTCMKTS:SGMD), Medical Marijuana Inc (OTCMKTS:MJNA), and Trulieve Cannabis Corp (OTCMKTS:TCNNF).

Green Thumb Industries Inc (OTCMKTS:GTBIF) has kept a strong trend of expansion in place.

The company just announced it will open Rise Duncansville, its 47th retail location, on June 30. According to the release, profits from the first day of sales will be donated to Last Prisoner Project, a nonprofit coalition of cannabis industry leaders, executives, and artists dedicated to bringing restorative justice to the cannabis industry. Green Thumb also donated the first day of profits to the Last Prisoners Project when Rise Chambersburg opened in Pennsylvania earlier this month.

“We are grateful to create jobs throughout the state as we continue expanding our retail footprint in Pennsylvania during the COVID-19 crisis,” said Green Thumb Founder and Chief Executive Officer Ben Kovler. “The team is also honored to partner with the Last Prisoner Project on the important work of redressing the past and continuing harms of unjust laws and policies so that victimless cannabis prisoners can walk free.”

Green Thumb Industries Inc (OTCMKTS:GTBIF) bills itself as a company that manufactures and sells various cannabis products in the United States. The company’s cannabis products include flower, concentrates for dabbing and vaporizing, edibles, and topicals.

The company markets its products through third-party retailers. It also owns and operates a chain of 50 retail stores under the RISE dispensaries name. The company was actually also named a Best Workplace 2018 by Crain’s Chicago Business.

It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.

Green Thumb Industries Inc (OTCMKTS:GTBIF) pulled in sales of $138M in its last reported quarterly financials, representing top line growth of 271.9%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($101.8M against $182.5M, respectively).

Sugarmade Inc (OTCMKTS:SGMD) is a juggernaut right now, or so it would appear. The numbers on the growth side are consistently remarkable and deserve note. That said, one should also be firmly aware that this is a speculative play as a small-cap that has only recently started to show up on the list of huge growth names.

To give an example, the company just put out a fresh release noting its performance in June for its BudCars subsidiary, which featured some really remarkable growth trends: BudCars is ramping in average daily sales (+41% m/m), total orders (+34%), average order size (+2%), sales (+36%), and gross profits (+31%). Those are all month/month data points. Annualized, we would be talking about thousands of percentage points in growth across every major category.

As CEO Chan put it: “June was another breakout month for BudCars growth across basically every single metric important to gauging our progress. Our pricing improved. Our average order improved. We did more business with more people and booked a significant jump in gross profits while holding our 47% gross margin level as volume increased.”

Sugarmade Inc (OTCMKTS:SGMD) operates as a product and branding marketing company investing in operations and technologies with disruptive potential. The company’s portfolio includes CarryOutsupplies.com, SugarRush, and Budcars.com.

The company has also recently made a point of noting its margins, suggesting that it sees “very consistent 46-52% gross margins on a wholesale inventory with very secure logistical underpinnings”. It also expects that this performance will translate to its new LA BudCars hub when it opens next month. In a world where Uber Eats and GrubHub and all the other deliver service providers are trending towards long-term bankruptcy despite strong top-line performance, this is an enormously important differentiation for the company to make.

The Los Angeles cannabis market is arguably the biggest municipal legal cannabis market in the world, and the Company conservatively estimates that its first LA hub will add at least $20 million in annualized sales, with a similar anticipated gross margin profile.

Sugarmade Inc (OTCMKTS:SGMD) pulled in sales of $416K in its last reported quarterly financials, representing top line growth of -27.3%. However, the company appears to be experiencing a strong growth acceleration due to its BudCars takeover, with revenues on pace for as much as $30 million in annualized sales this year.

Medical Marijuana Inc (OTCMKTS:MJNA) isn’t our favorite name on this list – to be clear. We would note that the company just announced that Raul Elizalde, co-CEO of its subsidiary HempMeds, was invited to speak on Endeavor’s expert digital panel, “Cannabis in Mexico: The Debate and Opportunities for an Emerging Industry,” which was held on June 24.

There is some notoriety in that.

“Raul pioneered the cannabis industry in Mexico and played an integral role in helping us find a pathway to legally selling CBD in several Latin American countries,” said Dr. Stuart Titus, CEO of Medical Marijuana, Inc. “We stand behind him in his legislative advocacy efforts and believe that he will add great value to this event.”

But the overall picture is still not desirable, in our estimation.

Medical Marijuana Inc (OTCMKTS:MJNA) casts itself as an investment holding company that operates in the medical marijuana and industrial hemp markets. Its products range from patented and proprietary based cannabinoid products to seed and stalk or isolated high-value extracts manufactured and formulated for the pharmaceutical, nutraceutical, and cosmeceutical industries.

MJNA licenses its proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal cannabinoid industry. It engages in the research and development of cannabinoid-based pharmaceuticals; and marketing and distribution of cannabidiol hemp oil-based products.

Even in light of this news, MJNA has had a rough past week of trading action, with shares sinking something like -7% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way.

Medical Marijuana Inc (OTCMKTS:MJNA) managed to rope in revenues totaling $16.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -4.2%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($6.2M against $11M, respectively).

Trulieve Cannabis Corp (OTCMKTS:TCNNF) just announced the doors of a record 50th location within the State of Florida opened on Friday, June 26th. In other words, one of the fastest expanding distribution forces in the cannabis space is still powering along on a rapid curve.

According to the release, the Ocala location is Trulieve’s 52nd location in the United States, 50 of which are located in the Company’s home state of Florida. Near downtown Ocala, the dispensary supports the Company’s mission to expand and ensure safe, reliable patient access statewide. It also joins Trulieve’s 49 other dispensaries statewide, including in nearby Gainesville, Lady Lake, and Daytona Beach. At approximately 4,400 square feet and with 10 point-of-sale stations, the dispensary will be the Company’s first in Marion County.

Trulieve Cannabis Corp (OTCMKTS:TCNNF) promulgates itself as a company that, through its subsidiary, Trulieve, Inc., engages in the cultivation, possession, distribution, and sale of medical cannabis in the United States.

It offers a suite of Trulieve branded products with approximately 125 SKUs, including nasal sprays, capsules, concentrates, syringes, and cannabis flower in tamper-proof containers for vaporizers, topical creams, tinctures, and vape cartridges. 

The company distributes its products to Trulieve branded stores (dispensaries) in Florida, as well as takes orders online and by phone for delivery. As of November 20, 2018, the company operated 21 dispensaries. Trulieve Cannabis Corp. is headquartered in Quincy, Florida.

If you’re long this stock, then you’re liking how the stock has responded to the announcement. TCNNF shares have been moving higher over the past week overall, pushing about 4% to the upside on above average trading volume.

Trulieve Cannabis Corp (OTCMKTS:TCNNF) managed to rope in revenues totaling $129.2M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 118.5%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($143.5M against $104.7M).

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email ([email protected]) or his Google+ page (https://plus.google.com/103338576216002376250).



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