I’ve been pounding the table for quite some time on Curaleaf (TSXV:CURA) as a top TSX pot stock. Indeed, this is the only Canada-listed cannabis company I would encourage investors to consider right now.
The fact is, the Canadian cannabis sector is filled with a variety of options for investors right now. There’s a lot of noise in cannabis investing these days. Indeed, retail investing via what’s hot on Reddit discussion boards has resulted in some investors raking in big wins. When one sees the gains posted on these sites, it can be hard to resist jumping on the bandwagon.
That said, I think Curaleaf is a less-discussed stock with much better potential than its peers that have skyrocketed much higher in a shorter amount of time. Here’s why.
Curaleaf is a U.S. company
U.S. exposure is going to be everything in the years to come. Potential U.S. Federal legalization of cannabis is on the minds of all cannabis investors today.
Despite being listed in Canada, Curaleaf’s operations are entirely focused in the United States. Indeed, Curaleaf ought to be considered by all investors looking to gain exposure to a market leader in the United States. The company has vertically integrated operations from coast to coast. Upstream, Curaleaf has distribution and cultivation facilities in 23 states. Additionally, Curaleaf is planning on expanding to states that recently legalized marijuana. Upon federal legalization, Curaleaf has a real shot at owning a strong market position in most U.S. states.
Curaleaf’s midstream operations are equally interesting. The company has value-added processing facilities across the country. These processing facilities produce a range of value-added products such as vapes, oils, and other high-margin items. Margin expansion will be the key focus of most cannabis producers over the medium term. Accordingly, Curaleaf’s position is highly desirable right now.
Downstream, Curaleaf has nearly 100 wholly owned dispensaries. In addition to these, the company works with a network of more than 1,150 dispensaries. Curaleaf is growing its market share at an impressive rate. Accordingly, I think this company has a shot at dominating the U.S. market in the years to come.
Investors in cannabis today need to realize the speculative nature of these stocks. This is a nascent industry with valuations based purely on expectations. If cannabis producers don’t meet investor expectations, we could see significant downside on the horizon. Additionally, if federal legalization doesn’t take hold south of the border, these stocks have a tremendous amount of potential downside.
As with all speculative assets, investors should limit exposure to what they can afford to lose. That said, for those so inclined, I think Curaleaf is the best in its class right now. I would highly encourage long-term investors looking for a winner in this sector to consider Curaleaf right now.
Like Curaleaf stock? Check out this top cannabis pick!
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Chris MacDonald has no position in any of the stocks mentioned.