Since marijuana stocks have experienced an unprecedented bull run recently, it is not easy to find one that is undervalued – in fact, we had to venture all the way down to Florida to find one.
Veteran Motley Fool contributor Eric Volkman and Healthcare and Cannabis Bureau Chief Corinne Jurney Cardina talk about that stock and why it’s so attractive in this Motley Fool Live clips recorded on February 5, 2021.
Corinne Cardina: Eric, what is a stockpile of marijuana that you think is very undervalued right now?
Eric Volkman: Well, there are no pots, I think, there are game undervalued.
Cardina: A little undervalued.
Volkman: Slightly, modestly undervalued.
Okay, an underrated piece I would say right now, people know about this stock, but other marijuana stocks have gotten more pressure than these guys. They are a layer called Trulieve Cannabis (OTC: TCNNF), they are based in Florida. Their strategy is basically to be quite dominant in their local market. Their market share there is almost 50%, and they are far from the largest retailer there.
They operate in Florida, and of course, Florida, as many people know, has only legalized medical marijuana. So, because medical marijuana is by nature a very limited market and kind of a fussy market, you can only sell to people who are licensed to use medical marijuana, Trulieve has done very well.
It’s a huge market, and not to continue to hit the table on this, but when Florida becomes legal with recreational activities, which I would think it would do, I can see no reason why not, Trulieve is right there. Its network of pharmacies is extensive, it is all over the state. They will really benefit. They know Florida, they feel the market is cold.
The downside to Trulieve is, compared to something we just mentioned a while ago, Cresco Labs in Illinois, they do not have much of a national footprint at all or hardly anything.
They have a presence in principle four other states, but it is very easy. They have a pharmacy in California, a pharmacy in Connecticut. They were recently granted three exemption permits in West Virginia, but again, that’s not a high number. It’s basically a game in a market.
But the fact that they have dipped into these other markets shows that they are not shy about doing so, and that they are careful, and they save their resources, they save their capital.
On top of all that, Trulieve is the most amazing of all a profitable marijuana business. They have done well. Do we have the numbers? Let me see. Again, let me check out my cheat sheet here. Where is Trulieve?
Cardina: I have their diluted EPS, after 12 months as $ 0.59, so it’s on the plus side. You are welcome.
Volkman: Yes exactly. They do not lose money and they also get bigger. They opened another Florida pharmacy, I think, at the end of last month.
I actually have the numbers here. In the most recently reported quarter, they posted revenue of nearly $ 182 million; unfortunately, it’s Canadian dollars, $ 182 million, net income of $ 6.3 million. Not huge numbers, but they are profitable.
So Trulieve would be my choice for, if not necessarily super underrated, a slightly undervalued, underestimated choice.
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