The hype is real in the cannabis sector today. Investors are growing increasingly bullish on the potential for cannabis companies to take advantage of U.S. Federal legalization. Indeed, a Biden White House and Democrat Senate all but seem to guarantee this catalyst.
Accordingly, for investors who are looking to play the cannabis space, Curaleaf (TSXV:CURA) is the hands-down best pick. Here’s why.
Curaleaf is in an enviable position relative to its peers
Recently, the executive chairman of Curaleaf, Boris Jordan, said that the federal legalization of cannabis might not take place until the second half of Joe Biden’s term. However, the largest cannabis company in the U.S. is still in a great position to make the most of this catalyst, even if investors have to wait.
Curaleaf has a sustainable, vertically integrated business model. This is precisely what makes Curaleaf so interesting to me. The company cultivates, processes, markets, and sells its products. Today, it operates in 23 states with 101 dispensaries, 30 processing sites and more than 23 cultivation sites. Indeed, this company has a significant head start in the U.S. cannabis market compared to its Canadian peers.
Curaleaf’s earnings reports convey the fact that this company is in a strong financial position. The company produced s a 205% year-over-year increase in its revenue. Once the company’s deal to acquire Grassroots closes, its growth rate could accelerate. Furthermore, Curaleaf’s margin has increased to 48%, indicating that the company has been growing profitably.
These fundamentals, combined with the company’s dominant U.S. position, makes it a stand-out in the cannabis sector today.
New European acquisition will strengthen global presence
Curaleaf is set to strengthen its global presence by acquiring Emmac Life Sciences, a European cannabis company, for US$286 million. By completing the takeover, Curaleaf will enter eight new cannabis markets in Europe. These include Italy, Spain, and Germany. Indeed, this acquisition could position Curaleaf as the largest cannabis company in the world based on revenue and the extent of operations.
Yes, Europe only allows medical cannabis as of today. However, it appears that more countries are considering the legalization of recreational use. It is believed that Switzerland and the Netherlands are already set to launch recreational programs within 2021. Jordan revealed that Curaleaf plans to acquire more companies in Europe. By entering these markets, the company can eventually expand its operations to the Middle East and Africa.
Countries like South Africa and Poland are considering recreational legalization. Hence, more acquisitions in Europe can be instrumental in facilitating the future expansion of global operations.
Strong financials, a prudent business model, and an aggressive acquisition strategy are what sets this company apart from its peers. I have no doubts that this cannabis stock is the ideal option for growth investors who want to play this space. For those seeking cannabis exposure, this is my top pick today.
Like the cannabis sector? Read what we think about this top pick:
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Fool contributor Chris MacDonald has no position in any of the stocks mentioned.