In today’s Marijuana Market Update, I respond to a viewer who asked me to analyze two popular cannabis stocks: Trulieve Cannabis Corp. (OTC: TCNNF) and Green Thumb Industries Inc. (OTC: GTBIF).
Shalom sent me this email:
I’m a subscriber of your YouTube channel and am a BIG FAN! It is the first time I’m emailing you at your suggestion by the end of your videos.
I will MUCH MUCH appreciate it if you can do a video analyzing Trulieve (TCNNF) and Green Thumb Industries (GTBIF) and preferably even compare the two and give your take.
Shalom mentioned that he owns and believes in both companies and isn’t looking for a recommendation — just my thoughts.
Well, Shalom, thank you for your question! Let’s dive into both of these companies.
Trulieve’s (TCNNF) Business Breakdown
Trulieve is a medical cannabis company that produces a wide range of cannabis products including smokable flower, edibles, vape cartridges and concentrates.
The Florida-based company operates 162 dispensaries in eight states:
- Pennsylvania.
- Arizona.
- California.
- Maryland.
- Massachusetts.
- West Virginia.
- Connecticut.
- And Florida, of course.
Trulieve is the largest dispensary operator in Florida with 113 locations.
How Green Thumb (GTBIF) Compares
Green Thumb distributes both medical and adult-use cannabis. Its product range is similar to Trulieve’s.
Based out of Chicago, the company operates 77 retail stores in the U.S.
GTBIF has a market cap of $2.1 billion, while TCNNF is larger with a market cap of $2.5 billion.
One thing to note is that both companies have increased annual sales in each of the last five years.
Looking at my Cannabis Power Ratings system, both stocks rate in the red. Trulieve scores a 30 overall, while Green Thumb scores a 36.
The biggest difference comes from the momentum factor. Green Thumb (32) scores higher than Trulieve (25).
Both are almost equal in value. Trulieve rates a “Neutral” 59, and Green Thumb comes in at 58.
Let’s break down the value metrics:
As I write, these two companies are pretty equal in terms of value. They boast similar price-to-sales and price-to-book values. While Green Thumb has a high price-to-earnings ratio, Trulieve’s is negative.
Trulieve and Green Thumb’s Stock Performance
If we overlay the stock price movement of both stocks over the last year, we can see that these two stocks have moved together for the most part.
Trulieve is priced higher, and we’ve seen higher highs in its stock than Green Thumb’s over the last 12 months.
During that time, Trulieve dropped 63.7%, while Green Thumb declined 69%.
So in examining our Cannabis Power Ratings system metrics and stock movements, these companies are aligned.
Concern for the Companies
The one thing about Trulieve is that its strongest position is in Florida. It’s a clear leader in the billion-dollar market — where it commands nearly 50% of all flower sales in the state. It is also strong in Arizona and Pennsylvania.
In the first quarter of 2022, Trulieve recorded $318.3 million in sales, making it the top revenue producer among U.S. multistate operators (MSOs) — overtaking Curaleaf Holdings (OTC: CURLF).
However, Green Thumb was the only U.S. MSO to post a net profit for the quarter.
Green Thumb was third among all U.S. MSOs for revenue in the quarter.
Trulieve’s biggest concern, for me, is that it lacks a presence in New York and New Jersey — two states that recently approved adult-use cannabis sales.
These are sizable markets, and not having a position in either is something to think about — especially considering how competitive the Florida market is.
On the other hand, Green Thumb has three of its RISE dispensaries in New Jersey and three in New York — putting the company in position to profit from these two large markets.
The Future for Trulieve + Green Thumb
In terms of cannabis companies, both Trulieve and Green Thumb have potential.
Trulieve’s lack of market penetration into New York and New Jersey is concerning, but the Florida market remains strong.
On the other hand, Green Thumb has fewer dispensaries but strong sales. Turning a profit in the first quarter of this year is encouraging and should be a trend that continues.
Bottom line: So, Shalom, both of these cannabis stocks could provide strong long-term results.
One more thing: Any questions? You can get Money & Markets swag by submitting a question for me, Adam O’Dell or Charles Sizemore that we’ll use in any of our videos. Just send us your questions and feedback.
Where to Find Us
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We have a lot of great weekly video features on our channel, including:
Ask Adam Anything — Where I get to sit down with Chief Investment Strategist Adam O’Dell and ask him any question (from you or me) and get his insights into the stock market.
Investing With Charles — Green Zone Fortunes co-editor Charles Sizemore and I talk about all things related to stocks and the economy, including comparing stocks to give you the best investment advice.
The Stock Power Podcast — Our weekly podcast where I show you the trends and analysis that moves the market.
All these series are on our YouTube channel.
Also, you can follow me on Twitter (@InvestWithMattC), where I’ll give you even more insights, not just in the cannabis market. You can also check out my new Stock Power Daily series on the Money & Markets website. I give you a new stock every day that I expect to outperform the market based on our proprietary Stock Power Ratings system.
Safe trading,
Matt Clark
Research Analyst, Money & Markets
