Canadian investors looking to gain exposure to marijuana stocks should look at companies south of the border. While quality U.S. marijuana stocks are close to generating consistent profits and cash flows, domestic cannabis producers continue to wrestle with industry-wide headwinds ranging from tepid demand, high inventory levels, oversupply, and mounting losses.
The U.S. is the world’s largest marijuana market, and the country may legalize the recreational consumption of pot at the federal level. This move should allow U.S.-based marijuana producers access to traditional sources of finance and the possibility to gain traction in other markets.
Keeping these factors in mind, the two best marijuana stocks you can buy this month include Green Thumb Industries (CNSX:GTII) and Curaleaf (TSX:CURA). Let’s see why.
The bull case for Green Thumb Industries stock
Valued at US$3.3 billion by market cap, Green Thumb Industries has trailed the broader markets in the last five years, falling over 6% in this period. Today, the cannabis stock trades 62% below all-time highs, allowing you to buy the dip.
While most of its peers are struggling with consistent losses, Green Thumb has reported a GAAP (generally accepted accounting principles) profit for three consecutive quarters. In the quarter ended in September, it reported revenue of $275.4 million and a net income of $10.5 million.
With 90 retail stores, Green Thumb reaches half the country’s population and remains a top investment choice for long-term shareholders.
Green Thumb reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of US$83 million in the third quarter (Q3), indicating a healthy margin of 30%. In the first three quarters of 2023, its operating cash flow stood at US$154 million, and the company ended the period with a cash balance of US$137 million.
Green Thumb continues to focus on operational efficiency, working capital management, and cash flow generation while navigating a sluggish macro environment in 2024. Moreover, Green Thumb is positioned to expand its adjusted earnings from US$0.05 per share in 2022 to US$0.24 per share in 2024.
The bull case for Curaleaf stock
Valued at a market cap of US$3.76 billion, Curaleaf reported revenue of US$333 million with an EBITDA margin of 23% in Q3. It reduced inventory by US$18 million, allowing it to end Q3 with a free cash flow of US$33 million and a cash balance of US$118 million.
Curaleaf International is a subsidiary of Curaleaf Holdings and is the largest vertically integrated cannabis company in Europe. Recently, Curaleaf International announced the acquisition of Can4Med, a Poland-based wholesaler operating in the medical marijuana segment.
Poland has one of the largest patient populations seeking medical cannabis in Europe, and the acquisition provides Curaleaf with a strong foothold in a high-growth market.
According to Matt Darin, the chief executive officer of Curaleaf, “This acquisition represents a significant step forward for Curaleaf International. Poland’s medical cannabis market is expanding rapidly, and our partnership with Can4Med allows us to better serve patients while driving growth across Europe.”
While Curaleaf is unprofitable, it should narrow its losses from $0.52 per share in 2022 to $0.13 per share in 2024.
