CCHWF - 2 Marijuana Stocks Wall Street Predicts Will Rally by 50% Or More

The marijuana industry has been gaining wider acceptance in the United States, with an increasing number of states legalizing cannabis for medical, recreational and other uses, eliminating the stigma once associated with its use. In fact, investors’ and analysts’ renewed confidence in the cannabis space has been buoyed by ongoing discussion around decriminalization of cannabis at the federal level.

So far, 18 states and the District of Columbia have legalized recreational use of marijuana. And with more states likely to legalize recreational marijuana in the coming months, the prospects of companies operating in this space look bright, and they are eagerly awaiting the opportunity to expand.

Furthermore,  House Judiciary Committee Chairman Jerry Nadler’s reintroduction of the MORE Act amid a strong call for federal level reform from social justice advocacy groups also bodes well for marijuana companies. As such, analysts are extremely bullish about the cannabis industry. Based on consensus price targets, Columbia Care Inc. (CCHWF) and Greenlane Holdings, Inc. (GNLN) are expected to rally 50% or more over the next 12 months. We think extensive distribution networks and substantial growth in key markets should help these stocks deliver solid returns in the near term.

Click here to check out our Cannabis Industry Report for 2021

Columbia Care Inc. (CCHWF)

CCHWF in New York City is a manufacturer and seller of cannabis-based derivative products and patient-centric health and wellness solutions. The company’s patent-pending proprietary medical brands include TheraCeed, ClaraCeed and EleCeed. It holds 39 licenses in 15 markets and operates 63 facilities.

Last month, CCHWF closed a  $74.5 million private placement offering of 6% senior secured convertible notes, due 2025. The company plans  to use the offering’s  proceeds for  working capital and for other general corporate purposes.

Also in June, CCHWF  signed a definitive agreement to acquire Medicine Man Denver, a leading vertically integrated cannabis operator, for a $42 million  upfront consideration. This acquisition should strengthen CCHWF’s position as the most scaled retailer, cultivator and seller of cannabis in Colorado.

CCHWF’s combined revenue increased 220% year-over-year to $92.49 million in the first quarter, ended March 31, 2021. It reported a $37.7 million combined adjusted gross profit, representing a 316%  increase  from its  year-ago value. The company’s adjusted EBITDA came in at $9.08 million, compared to negative $10.04 million in the prior-year period. CCHWF’s cash flow increased 557% year-over-year to $176.5 million over this period.

A $0.02  consensus EPS estimate for the next quarter, ending September 2021, represents a 140% improvement year-over-year. The $509.18 million consensus revenue estimate for the current year represents a 183.7% increase from the same period last year. CCHWF’s stock has gained 84% over the past year.

Of the four Wall Street analysts that have provided ratings for the stock, three have rated it Buy. Closing yesterday’s trading session at $4.65, the $10.79 consensus price target represents a 132% potential upside.

Greenlane Holdings, Inc. (GNLN)

Founded in 2005, GNLN sells specialty vaporization products, such as vaporizers, liquid nicotine, storage solutions, pipes, and other related accessories under the VIBES rolling papers, Pollen Gear,  Marley Natural accessory line, and K. Haring Glass Collections brand names. It operates through e-commerce websites that include  Vaposhop.com, Vapor.com, Higherstandards.com, and others.

In March, GNLN and KushCo Holdings agreed on a merger., Under their agreement,  KushCo Holdings will  become a wholly owned subsidiary of GNLN. This marriage should  be able to cater to a premier group of customers and offer highly complementary products.

During the first quarter, ended March 31, 2021, GNLN’s core sales increased 11.6% year-over-year to $32.29 million. The company’s core revenue in the United States increased 12.9% year-over-year to $27.73 million, while its core revenue in Europe rose 19.2% from the year-ago value to $2.78 million. Its merchandise margin increased 4.9% and resulted in a 19% increase in merchandise gross profit over this period.

Analysts expect GNLN’s EPS for the quarter ending September 30, 2021, to increase 37.5% year-over-year. The company’s revenue is likely to increase 48.4% for its fiscal year 2022. Over the past year, the stock has gained 14%. Also, GNLN’s stock has returned 12.9% so far this year.

Wall Street analysts are very bullish on GNLN. Three analysts have provided ratings for the stock, and all have rated it Buy. The $6.67 consensus price target represents a 49.2% increase from its last closing price of $4.47.

Click here to check out our Cannabis Industry Report for 2021

CCHWF shares rose $0.01 (+0.11%) in premarket trading Thursday. Year-to-date, CCHWF has declined -23.14%, versus a 15.45% rise in the benchmark S&P 500 index during the same period.

About the Author: Imon Ghosh

Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.

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