New Frontier Data just released the US Cannabis Report 2019 Industry Outlook, which projects the legal cannabis market to grow at a CAGR of 14% and reach $30 billion by 2025. These projections are very positive indeed; however, the fragmented and overcrowded industry makes it difficult for investors to know which US pot stocks will stand the test of time.
Upcoming catalysts expected to give US pot stocks a much-needed boost after a difficult summer include the upcoming SAFE Banking Act vote later this month and the closing of previously announced acquisitions. However, some marijuana companies are already showing significant upside.
According to Canaccord Genuity analyst Matt Bottomley, vertically-integrated multi-state operators (MSOs) are the way to go.
Here are the US pot stocks that have the potential to dominate the $30 billion legal cannabis market in the US.
US Pot Stocks Expanding Their Foothold
Curaleaf Holdings (CSE:CURA) (OTCQX:CURLF) is one of the US pot stocks that continues to expand via M&A activity. So far this year, Curaleaf has announced two significant acquisitions that will double its retail footprint and expand its product portfolio.
In May, Curaleaf announced the purchase of Cura Partners Inc.’s Select brand to expand its presence on the West coast. Then, in June, the company revealed its plan to acquire Grassroots, the largest private vertically-integrated MSO. The Grassroots deal will not only double Curaleaf’s number of retail licenses and increase the number of states the company operates in from 12 to 19, but it will also make CURA the world’s largest cannabis company by revenue.
Another US pot stock that is in the process of completing a sizable acquisition is Cresco Labs (CSE:CL) (OTCQX:CRLBF). Cresco announced the acquisition of Canadian marijuana brands company Origin House (CSE:OH) (OTCQX:ORHOF) in April; however, the deal has been delayed due to antitrust requirements.
The transaction, which is set to complete by November 15, 2019, at the latest, will give Cresco exclusive access to California’s massive retail cannabis market and increase the company’s dispensary exposure to more than 700 dispensaries nationwide.
Harvest Health & Recreation (CSE:HARV) (OTCQX:HRVSF) is another company that has continued to expand its foothold in the US legal marijuana market. The company is the kingpin of multi-state dispensary operators with an impressive 142 licenses across 17 states.
US Pot Stocks Turning a Profit
One of the major concerns among marijuana investors is whether or not US pot stocks can generate revenue. The fact is, at present, there are only a handful of companies that are turning a profit.
One of the US pot stocks that’s finally seeing a payoff for its hard work is Aleafia Health (TSX:ALEF) (OTCQX:ALEAF). The company has been hard at work building its presence in the medical marijuana space this year, combining with Emblem in March and increasing its fully-funded production capacity to 138,000 kilograms per year.
Aleafia is gearing up to report its Q3 2019 financial results, which are slated to be the company’s first profitable quarter thanks to prudent capital allocation and strong cannabis revenue growth. The company also announced that it has $51 million in cash on hand and has increased its active, registered patients to 10,000, a 42% increase in just three months.
Another US pot stock that is raking in the dough is Trulieve Cannabis Corp. (CSE:TRUL) (OTCQX:TCNNF). The company has been primarily focused on its home state of Florida; however, it has been expanding into Massachusetts, California, and Connecticut.
While investors seem to favor MSOs with an extensive reach, Trulieve’s Florida operations have proven to be very lucrative. In August, the company revealed a record revenue of $57.9 million USD and an adjusted EBITDA of $31.6 million USD.
US Pot Stocks With Major Upside
Often the investments made in US pot stocks are influenced by the analyst coverage they receive, which is why iAnthus Capital Holdings (CSE:IAN) (OTCQX:ITHUF) might be the perfect addition to any cannabis investment portfolio.
To say that analysts are bullish on iAnthus is an understatement. In fact, Wall Street’s $7.50 median price target implies an astounding increase of 296.83% from the company’s current $1.89 USD share price.
Another US pot stock that’s being favored by analysts is Greenlane Holdings (NASDAQ:GNLN), a leading distributor of vape supplies, packaging, and smoking accessories. Five Wall Street analysts have issued price targets for Greenlane, all of which are well above the company’s current $3.85 USD stock price. The average 12-month price target for Greenlane is $22.10 USD, which represents a whopping 482% upside.
Of course, it remains to be seen which US pot stocks will stand the test of time and capitalize on the ever-expanding legal market. Still, there is no doubt that the aforementioned companies will be some of the top contenders.
Are there are any US pot stocks on your radar that we haven’t mentioned? Let us know about them in the comments!
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