2 of the Cheapest Cannabis Stocks You’ll Find Today

Finding good business that is consistently profitable in the cannabis industry is not an easy task. Finding one that is cheap is even more difficult. But there are a few gems that can offer investors great value for money while also providing them with incredible long-term growth opportunities.

You will have a hard time finding better-rated top stocks right now than MariMed (OTC: MRMD) and Trulieve Cannabis (OTC: TCNNF). Both companies are profitable (based on adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA) and both have excellent growth potential.

Image source: Getty Images.

1. MariMed

With a market capitalization of around $ 230 million, MariMed isn’t one of the larger cannabis companies. But there’s a lot of potential here, especially since the company released an excellent earnings report for the fourth quarter and full year 2020. Year-end results, released March 23, showed sales of $ 20.4 million, nearly four times the $ 4.2 million recorded in the same period last year. Adjusted EBITDA was positive $ 7.7 million compared to a loss of $ 16 million last year. For the full year, cannabis sales were $ 50.9 million while Adjusted EBITDA was $ 16.3 million.

Due to its market capitalization, MariMed trades with a very attractive 14x adjusted EBITDA. To put this into context, this is compared to some of the bigger names in the industry:

Company’s Market Cap 2020 Adjusted EBITDA Multiple Cresco Labs $ 2.7 billion

$ 116 million

23 Green Thumb Industries $ 6.3 billion

$ 179.6 million

35 Curaleaf $ 9 billion

$ 144.1 million

62

Source: company registrations.

Investors don’t pay a huge premium for MariMed at all. One of the benefits of investing in a smaller business like this is that the company isn’t as popular and well known as a big name like Curaleaf. And there’s a good value here; In 2021, MariMed expects another strong performance with sales doubling to $ 100 million. It expands its presence in several states, including Maryland, Delaware, and Massachusetts.

Over the past year, MariMed’s shares are up more than 360%, while the Horizons Marijuana Life Sciences ETF is up a modest 68%. The good news, however, is that it’s not too late to buy MariMed – valuation remains attractive and it could be one of the most underrated buys in the industry right now.

2. Trulieve

Trulieve is a far bigger player than MariMed, who posted sales of a whopping $ 521.5 million last year. With a market capitalization of $ 4.6 billion, the company ranks alongside the industry leaders. Despite the high valuation, you will be surprised that Trulieve is still an attractive purchase value. Adjusted EBITDA in 2020 was $ 251 million – nearly half of total revenue. With margins this strong, it’s no surprise it should be on this list as it only trades at 18 times its Adjusted EBITDA.

I’ve long been a fan of Trulieve’s model because it goes against the grain. Rather than aggressively taking every opportunity possible, the company expanded its operations in Florida, dominated the market, and then began to penetrate other states. Although it is technically represented in six states, 81 of its 86 pharmacies are still in its home state of Florida. And it’s hard to argue with that approach, given that Florida is one of the top three largest markets in the country with $ 1.3 billion in medical cannabis sales last year, even though the state has not yet legalized recreational marijuana.

Trulieve’s management team has shown discipline in its expansion efforts, so it is not surprising that the company’s operations reflect this, with expenses under control and revenues growing. While Trulieve may not be the market leader in terms of sales (Curaleaf’s $ 626.6 million last year brings it a long way), it is definitely one of the best-run cannabis companies out there. If you’re looking for a multistate operator to add to your portfolio, Trulieve is a stock you don’t want to overlook.

This article reflects the opinion of the author who may disagree with the “official” referral position of a Motley Fool Premium Consulting Service. We are colorful! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.