The Best Cannabis Play Is Cheap Today

Here’s why Curaleaf Holdings (TSXV:CURA) continues to be my top pick in the cannabis sector right now.

| More on:
edit Jars of marijuana

Image source: Getty Images

It is not a secret that Curaleaf (TSXV:CURA) has been among my top picks from the cannabis sector for a long time. This largest marijuana producer in the U.S. by sales has benefitted from the entire buzz around federal pot legalization in the U.S.

Regardless of its size in the market, this top cannabis play is trading at a valuation that’s cheaper than many Canada-focused cannabis companies. This doesn’t make sense. Indeed, growth investors may want to give this stock a hard look at these levels.

Here are more reasons why I like Curaleaf right now.

The perfect blend of a strong strategy and organic growth

Though this vertically integrated company is listed in Canada, Curaleaf operates mainly in the U.S. and Europe. Curaleaf operates in 23 states and five western E.U. countries. Additionally, the company has 24 cultivation sites, nearly 30 processing facilities, and as many as 106 dispensaries. Curaleaf has expansion plans on all fronts. Indeed, the company is looking primarily at increasing its retail exposure over the medium term. For those bullish about the company’s ability to capture value along the supply chain, this is highly bullish.

Organic growth remains strong with Curaleaf. However, this company is also looking to grow via acquisitions. Curaleaf has the cash reserves and management team to do so effectively.

The company has a strong foothold in the U.S. market. Indeed, Curaleaf’s coast-to-coast coverage of the U.S. market makes this a top pick right now. However, with marijuana legalization potentially in the works in the U.S., Curaleaf is well positioned to benefit from this key growth catalyst.

Bottom line

Curaleaf’s international operations make this a cannabis company every Canadian investor ought to consider. Indeed, many of the Canadian cannabis options can’t provide the kind of growth leverage Curaleaf can. Given its size and vertically integrated model, this is a company with the potential to provide outsized profits over time.

When profitability becomes the core focus of investors, I think more will gravitate toward Curaleaf. Right now, growth appears to be all that matters in this sector.

However, in this regard, Curaleaf is still a winner. The company’s revenue-growth rate is likely to be obscene for the next few years. Continued expansion in the U.S. and Europe should ensure this.

The cannabis sector remains a highly speculative one to invest in. Thus, any investor considering cannabis stocks like Curaleaf should take a measured, cautious approach. This isn’t a company I’d bet the farm on. But it is the best of its peer group, in my view.

For those looking to bet on cannabis, Curaleaf is my top pick.

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.

More on Cannabis Stocks

Worker tags plants at an industrial cannabis operation
Cannabis Stocks

Can Canopy Growth Stock Finally Recover in 2024?

Down 98% from all-time highs, Canopy Growth remains a high-risk investment in 2024 given its weak fundamentals.

Read more »

A close up image of Canadian $20 Dollar bills
Tech Stocks

3 No-Brainer Stocks to Buy With $20 Right Now

These three stocks are easy buys for those who don't have all that much to spend, and want long-term growth…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Slow Burn: Is Aurora Cannabis Finally a Good Buy in June?

One of the benefits of choosing from some of the most beaten-down market segments like cannabis is that even a…

Read more »

Caution, careful
Cannabis Stocks

I Wouldn’t Touch This TSX Stock With a 60-Foot Pole

I wouldn't touch Canopy Growth Corp (TSX:WEED) stock with a 60-foot pole.

Read more »

edit Cannabis leaves of a plant on a dark background
Cannabis Stocks

Why This Little-Known Cannabis Stock Could Double in 2024

This cannabis stock has already doubled this year since 52-week lows and could easily rise that much once more.

Read more »

Bad apple with good apples
Cannabis Stocks

1 TSX Stock I Wouldn’t Touch With a 420-Foot Pole

Down 87% from all-time highs, Cronos Group stock is a still a high-risk investment for long-term shareholders in 2024.

Read more »

A cannabis plant grows.
Cannabis Stocks

Canopy Growth: Buy, Sell, or Hold?

Canopy Growth (TSX:WEED) stock should make a killing on U.S. expansion, but investors will need to be very patient.

Read more »

Marijuana plant and cannabis oil bottles isolated
Energy Stocks

3 Canadian Value Stocks to Buy Right Now

Undervalued Canadian stocks such as Secure Energy should be part of your shopping list in May 2024.

Read more »