For marijuana stocks, 2019 is a year to forget. This is the year that saw a broad selloff in marijuana stocks, with many pot stocks plunging to multiyear lows. Cresco Labs Inc (CNSX:CL) (OTCMKTS:CRLBF) did not escape the widespread marijuana stocks selloff. At $5.1/share currently, Cresco is down 62% in the last seven months.
About Cresco Labs
Here is a brief profile of Cresco for those investors who may have just come across this company for the very first time. Cresco Labs is marijuana company that currently operates in six US states but is in the process of entering more markets. Headquartered in Illinois, Cresco is engaged in the cultivation, processing, and retail of marijuana products. It already has several popular marijuana product brands to its credit.
Investors have avoided Cresco Labs for the wrong reason
A number of pot stocks have started recovering, but Cresco has continued to trade near its record lows. What might be happening?
Investors recently sold Cresco stock after the company announced an arrangement with Canaccord Genuity to raise up to C$55 million in additional cash through equity sale. Worries about the dilutive impact of the Canaccord Genuity deal seemed to drive the selloff. But investors selling off Cresco stock forget that while many marijuana companies have been scaling down their production, suspending projects and cutting jobs, Cresco has actually been expanding. The company has been expanding its production capacity, adding more retail outlets through strategic acquisitions and hiring more people.
While the Canaccord Genuity arrangement may lead to stock dilution, that is nothing compared to the huge return investors can expect from Cresco down the road, especially considering how well the company is positioned in the marijuana market.
Here are three reasons Cresco stock is a buy heading into 2020.
- Cresco is in solid financial standing
The big banks have generally shunned doing business with pot companies for fear of running afoul of federal regulators. Consequently, many American marijuana companies face limited funding options without the big banks being there to provide them loans. Funding shortage has scrimped development and resulted in lost opportunities at many marijuana companies. But funding isn’t a big problem at Cresco. The company finished the third quarter with $73.7 million in cash. In addition, Cresco has no debt. All that means that Cresco can continue to invest in its development and take advantage of the opportunities as they arise while its competitors struggle with financing shortage and debts to repay.
- The growth potential for Cresco in its home state is enormous
Cresco has bright growth prospects. In Cresco’s home state of Illinois, medical marijuana is currently the only available market. But that is about to change in just a few weeks from now. Illinois legalized recreational marijuana this past summer and the sale of recreational marijuana in the state is set to begin on January 1, 2020. Recreational marijuana will widen the market opportunity for Cresco in a state where it already has the largest share of the medical marijuana market. Cresco has prepared well for the recreational marijuana market in Illinois, including through expanding its cultivation and processing capacity, and hopes to have a strong first-mover advantage.
The marijuana market in Illinois was estimated at $1.6 billion in 2018 and is forecast to grow to $4.0 billion by 2022, presenting Cresco with a huge growth opportunity in its backyard. That should allow the company to continue its robust revenue growth for more years. Cresco’s revenue grew 184% year-over-year in the third quarter, building on the back of 253% year-over-year revenue growth in the second quarter and 313% year-over-year growth in the first quarter.
- Cresco expanding in the world’s largest marijuana market
Cresco is about to close a landmark deal: acquisition of Origin House, a marijuana brand development platform and distribution company operating in the United States and Canada. The acquisition of Origin House is expected to close in early 2020 and will give Cresco’s expansion into California a significant boost. California is the world’s largest marijuana market. Marijuana sales in the state topped $2.5 billion in 2018 and are on track to hit $5.6 billion by 2022.
The addition of Origin House will go a long way into fueling Cresco’s sales and potentially accelerate the company’s march to profit territory.
In addition to California, Cresco is also expanding in New York, Massachusetts, and Michigan. All these three states have promising marijuana markets.
In New York, for instance, Cresco recently expanded in the state with the acquisition of Valley Agriceuticals, thereby adding four marijuana shops in the state at once. Marijuana sales in New York were $264 million in 2018 and are projected to increase to over $1.5 billion by 2022.
Although Cresco Labs has dropped alongside other marijuana stocks, there is a good chance the market has unfairly punished Cresco. But that may have only opened an opportunity for investors who can decipher Cresco’s bright prospects to enter the stock at a steep discount.
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Disclosure: We have no position in Cresco Labs and have not been compensated for this article.
What Do Investors See In Medical Marijuana Stock (OTCMKTS:MJNA)?
Medical Marijuana Stock (OTCMKTS:MJNA) has emerged as one of many investor’s favorite pot stocks in the legal cannabis universe in 2020. The stock is already up about 10% in 2020, demonstrating how investors have warmed up to the stock early on in the New Year.
Following a disastrous 2019, cannabis investors lost money but have also learned that their best bets are stocks with strong fundamentals. They are looking for companies that have positioned themselves well in the cannabis industry and have what it takes to go for the opportunities. That is why MJNA stock is catching a lot of investor attention in 2020 because of how it has positioned itself in the cannabis market.
Robust revenue growth and strong financial position have also helped put MJNA on the radar of investors hunting for quality cannabis stocks. Revenue at MJNA more than doubled from $26.5 million in 2017 to $60 million in 2018. MJNA is also not in financial distress as may be the case with other cannabis companies out there. The company finished the third quarter, the most recent reported period, with $5.5 million in cash reserves.
Moreover, MJNA has recently taken steps to expand into new international markets and invest in companies that are leaders in their segments. These prudent actions are helping lift Medical Marijuana stock as more investors learn about them.
About Medical Marijuana stock
Is Tilray Inc (NASDAQ:TLRY) A Buy Or Sell?
For Tilray Inc (NASDAQ:TLRY) and the rest of cannabis stocks, 2019 was no doubt a bad year. But 2020 is shaping up to be a promising year for the stock. To start with, Tilray stock has already gained 8.35% year-to-date. If that says anything, it shows following the broad selloff in Tilray stock last year, we’ve got to a point where sellers are giving way to buyers in the stock.
There are several catalysts that should continue driving NASDAQ:TLRY as you’re about to see. First, below is a brief profile of the company we’re discussing.
Tilray is a Canada-headquartered global cannabis company. It is engaged in activities of cannabis cultivation and processing as well as marketing and distribution of cannabis products. Tilray already has several cannabis products brands to its portfolio. It operates across five continents through subsidiaries in Canada, Australia, Germany, and Portugal.
Following the broad collapse of cannabis stocks in 2019, investors are looking for cannabis stocks that can make a positive impact on their portfolios in 2020. Tilray stands out as an attractive cannabis stock pick in 2020. Here are some of the exciting things about the company.
Tilray CEO sees a bright future for the cannabis industry
On January 25, Tilray CEO Brendan Kennedy spoke on Bloomberg. In that interview, Kennedy framed a rosy outlook for the…
Is Cronos Stock (TSE:CRON)(NASDAQ:CRON) A Buy?
Cronos Stock (TSE:CRON)(NASDAQ:CRON) stock fell 9.22% on January 24, marking its steepest decline so far in 2020. The stock plunge followed an important disclosure that you would only expect from a company that is trying to be straight and transparent with investors. Here’s what happened.
On January 22, after market close, Cronos made a regulatory filing detailing changes in its executive team. In that SEC filing, Cronos revealed that David Hsu and William Hilson have stepped down as its chief operating officer and chief commercial officer, respectively. Unfortunately, some investors read bad news in the executive exits and sold their shares in Cronos.
But a careful reading of the filing doesn’t seem to raise any red flags. Therefore, the big stock plunged points to investors panicking to the degree of responding to a mosquito bite with a missile.
There is no doubt that 2019 was a difficult year for cannabis stocks and Cronos Stock is no exception. But before the uncalled for reaction to Cronos’s regulatory filing, we had been at a point where sellers were starting to give way to buyers in Cronos stock. The stock has gained about 8.0% in the past one month. It had gained more than 13% year-to-date before the January 24 big selloff.
About Cronos Stock
Cronos Stock is a Canada-based global cannabis company. Cronos operates through subsidiaries and…