24 Jan New Buy Rating – CuraLeaf Holdings (CURA)
Buying opportunity – Curaleaf Holdings Inc. (CURA.PURE)
In 2019 we saw the Cannabis sector sell-off around 50% on average for a lot of the ‘major’ players – think Canopy Growth Corp, Aurora Cannabis, and Aphria Inc. to name a few.
Since the beginning of 2020, off the back of what some are calling the ‘bottoming-out’ of the sector in December 2019, we have seen substantial gains across the board as these companies recover. Canopy Growth, considered to be the industry-leader, saw the value of its share price rise from $18 to up over $23. Let’s call it a 25% gain for the month of January, with still a week left!
This is the theme across the board, with all of them ramping up as the industry picks up momentum again on the positive outlook of Federal Legalisation for the United States.
Late last year the House of Reps passed the SAFE Act of 2019, which would protect financial institutions that offer banking services to cannabis-related companies. The House Judiciary Committee also approved a bill known as the MORE Act, which would decriminalise marijuana at the federal level in the US, if approved by the Senate. Stocks rebounded off their lows sharply at the time of these announcements.
These gains have continued into 2020 and look set to continue further as more data comes out showing the rapid rate of growth across the board for the Licenced Producers in this sector.
We are seeing increases in production, sales, and net revenue. It’s all increasing, and with it, their companies share price.
This brings to me to a fantastic little opportunity that’s come across my desk today –
Curaleaf Holdings Inc. (CURA.PURE)
Given the current share price is currently around 40% lower than its high in 2019 I view this as an enormous discount and one that’s hard to pass up given the sector’s future outlook.
Overnight, Curaleaf reported double-digit growth on sales and TRIPLE-digit growth on its earnings. In addition, the company’s acquisition of Grassroots will expand Curaleaf’s footprint across the American Midwest, namely Illinois, where the marijuana market is expected to reach $1.3billion in just the next 3 years, according to data from Chicago-based research firm Brightfield Group.
As such, Illinois has become a main target as cannabis companies go on buying sprees to establish themselves as national contenders in the industry. We believe that Curaleaf, by acquiring Grassroots when they did, have positioned themselves nicely to do just that.
Currently trading at around $9, CURA.PURE is a BUY with a price target of $12.
Are you ready to start investing in the cannabis industry? Contact me on 02 9002 0360 or send me an email at firstname.lastname@example.org.
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About Jacob Coombs
Jacob Coombs is a licenced Investment Advisor with Capital 19, who has developed an exceptional grasp of market trends over the past 8 years. His expertise in global emerging trends is sought after by Australian investors and his research and expert analysis of the global cannabis industry has unearthed significant investment opportunities for his clients.