The U.S. will become the world’s largest legalized cannabis market. That is, if the Biden administration moves forward with recreational cannabis legalization legislation. Indeed, on this catalyst, the jury is still out.
However, speculators will do what they do best and speculate. Today, the cannabis sector is red hot. Indeed, investors in growth sectors like cannabis want companies leveraged to this catalyst right now.
Accordingly, for investors seeking as much U.S. exposure as possible, I have a top pick to consider. My top idea in the cannabis space right now is U.S. MSO Curaleaf Holdings (TSXV:CURA).
Here’s why I think investors should consider this stock over all other cannabis stocks today.
Strong growth prospects long term
Boris Jordan, executive chairman of Curaleaf, has said he believes cannabis legalization proceedings won’t take place until well into the second half of Biden’s term. That said, Curaleaf’s positioning in the U.S. market in its current state positions the company well for eventual legalization, if and when it takes place.
I think Curaleaf’s vertically integrated business model is a thing of beauty. The company has exposure to the entire value chain. Curaleaf has cultivation, processing, and retail assets. It’s working on developing and growing its value-added products. The company’s margins remain strong, and it’s got a coast-to-coast presence in the U.S. right now. In fact, the company dwarfs its competition in the U.S., and it’s the largest player south of the border.
These factors have played into the company’s stellar earnings numbers. Curaleaf produced revenue growth of 205% year over year. This sort of growth rate is the envy of the sector and is one factor I think needs to be given top consideration by investors today.
Curaleaf is a top pick of mine for a speculative play in the cannabis sector. While I do feel the sector is broadly overvalued right now, there are pockets of growth that make sense. And Curaleaf is one of those unique plays I think could take off long term.
Curaleaf has the cash flow growth and margin expansion potential to be able to absorb and integrate acquisitions within its business over time. Unlike its peers, it’s got size and scale in the U.S. market. It’s a gem of a cannabis company, as far as publicly traded options go.
I think Curaleaf’s move to expand into Europe via its Emmac Life Sciences deal provides another element of growth to investors betting on a global winner in the cannabis race. Curaleaf is, hands-down, my favourite pick in this sector for many reasons.
Accordingly, I’d highly recommend investors thinking about cannabis investing put Curaleaf on their watch list.
Like this top cannabis pick? Have a read of our analysis of this company:
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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.