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2 “strong buy” cannabis stocks showing monstrous growth
Investors have settled on growing companies over the past year, and one segment that has grown is the fledgling cannabis industry. The sector offers a unique proposal and the prospect of growth, as there is still a major catalyst on the horizon that will completely change the sector. As expected, a Democratic-led Senate was good news for those who are betting on marijuana reform at the federal level; And it appears that the anticipated changes can happen faster than initially expected. Supported by Senate Majority Leader Chuck Schumer, Democratic senators have declared that they will put pressure on the legalization of marijuana at the federal level, promising “a unified discussion project on [cannabis] retirement ”in the first half of this year. The statement fuels expectations that the Democratic majority in Congress will approve – and that President Biden will sign – a bill to legalize marijuana. Investors are also looking for new legalization measures at the state level; an important state in this regard is New York. Therefore, the cannabis industry is improving. There is an expanding network of state legalization regimes and expectations of a change in federal policy; both are pressing up on cannabis stocks. In this context, we used the TipRanks database to find two cannabis stocks that were marked as’ Strong Buys’ by the analysts’ consensus. Both have had impressive performances in the year so far and are expected to grow further next year. Village Farms International (VFF) We will start with Village Farms International, a company that has long been involved in the agricultural business niche. The company started out as a farmer, producing high quality vegetables throughout the year to be sold on the North American market. This track record suited the company well for a transition to the cannabis industry – Village Farms has experience in greenhouse production and cultivation on an industrial scale. Village Farms shares are showing a tremendous growth profile, rising 327% in the last 12 months – with a sharp increase in the past few days. Two important news has precipitated the increase since the end of January. First, the company paid in full – ahead of schedule – the $ 15 million debt it incurred during the November acquisition of cannabis-growing company Pure Sunfarms. Second, Village Farms increased its investment in the Asian cannabinoid company Altum by 50%, to hold a 10% stake in the company. The change increases Village Farms’ international reach and its ability to increase Altum’s holdings in the future. The company was able to finance these movements because it had a successful sale of shares in January, putting another 10.8 million shares on the market and raising $ 135 million in new capital. In addition to its strong capital and expansion positions, Village Farms has reported solid financial results. The company obtained revenues of US $ 43 million in 3Q20, a 12.5% gain year on year. EPS stood at 1 percent per share, a turnaround from the $ 0.10 loss in the previous year’s quarter. Covering Village Farms for Craig-Hallum, 5-star analyst Eric Des Lauriers writes: “Village Farms has clearly established itself as Canada’s leading cannabis producer, with the No. 1 brand and industry-leading profitability. Canadian cannabis sales from 2020 to October (most recent available) have increased 128% per year, and dispensary counts are expected to accelerate by 2021, providing a wind in favor of VFF revenues. ”Turning to the US markets and VFF’s position in Canada’s largest neighbor, the analyst adds:“ With 5.7 million SF of greenhouses in Texas, the company also has a real option from the US, which is finally being appreciated by investors after GA’s election. The VFF has historically been devalued compared to less profitable peers, but we expect stocks to continue to work high … as the prospect of reform in the US increases throughout the year. ” To this end, Des Lauriers values the VFF as Buy, and its $ 25 target price suggests that the stock has room for ~ 26% high next year. (To view Des Lauriers’ history, click here) Overall, there are 3 recent reviews on VFF’s shares, all of which are purchases, giving the shares a strong consensus rating from buying analysts and showing a general agreement on Wall Street about the company’s strengths. The shares are quoted at $ 19.90, and the average price target of $ 24.33 implies an increase of ~ 23% for the following year. (See VFF’s stock analysis at TipRanks) TerrAscend Corporation (TRSSF) The next cannabis stock we are looking at, TerrAscend, is another major cannabis producer in the US, Canada and Europe. The company is involved in the medical and recreational sides of the market, and grows and produces cannabis and markets a range of products through various brands. TerrAscend’s US operations are located in California, Pennsylvania, New Jersey and Utah, and the company plans to expand as more states legalize cannabis. In a strong sign of the strength of the cannabis industry, TRSSF’s shares have risen 624% in the last 12 months. The growth was driven by the expansion of farming operations in California and Pennsylvania and the move to the adult recreation market in New Jersey. Last month, TerrAscend closed a sale of non-brokerage private placement shares, placing more than 18 million common shares on the market. The sale price was C $ 12.35 (US $ 9.72), and the offer raised C $ 224 million (US $ 176.3 million). Most of the proceeds – about 80% of the total – were made by four major institutional investors based in the United States. The funds raised will be used to continue the expansion of the company’s cultivation operations (TRSSF has plans to expand cultivation and manufacturing operations in New Jersey), as well as to pursue merger and acquisition activities. TerrAscend’s rapid growth and strong future prospects have attracted the attention of top-level analysts, including Craig-Hallum’s 5-star analyst Eric Des Lauriers (mentioned above). “TerrAscend is a leading multi-state operator (MSO) in the U.S. cannabis market with first-rate management, assets and access to business flow. We have been optimistic about the company since the coverage started last year and we are happy to say that TRSSF The team exceeded our expectations, generating rapid increases in margins and operational leverage that earned them a solid place in the Top Tier of MSOs, “noted Des Lauriers. The analyst summed it up, “[With] More than $ 280 million raised since the elections and federal reform moving faster than expected, we think TRSSF deserves an award for peers. “In line with his optimistic comments, Des Lauriers values TRSSF’s shares as Buy and has a $ 20 price target that implies a ~ 31% appreciation potential in the next 12 months. Again, we are looking at a broadly agreed action by Wall Street analysts – the strong buy consensus rating is unanimous, based on 7 recent reviews.The stock is selling for $ 15.30 and its recent appreciation has pushed that price almost to the target of average price of $ 15.43. (See TRSSF stock analysis at TipRanks) To find good ideas for cannabis stocks traded in attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all the insights from capital of TipRanks. Disclaimer: The opinions expressed in this article are exclusively those of the analysts presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before doing any investment.