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

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

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

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

Canopy Growth Stock: The Only Cannabis Stock to Consider Long Term

The cannabis stock industry remains an incredibly high risk one, but Canopy Growth (TSX:WEED)(NYSE:CGC) stock provides the best opportunity for…

Read more »

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

Should You Stay Away From HEXO Stock?

HEXO (TSX:HEXO)(NASDAQ:HEXO) stock is on a downward spiral, and there is little hope it is going to recover soon.

Read more »

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

Why Did Aurora Cannabis (TSX:ACB) Stock Plunge 75% in 2022?

A prominent cannabis stock has plunged by 75% in 2022, as the company’s losses continue to mount in the face…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Fire & Flower: A Small Pot Stock Poised for Strong Growth

Fire & Flower is a cannabis retailer well-positioned for growth thanks to its digital and delivery initiatives.

Read more »

edit Jars of marijuana
Cannabis Stocks

Why Aurora Cannabis (TSX:ACB) Stock Is Sinking This Week

Starting another round of capital raising has hurt investor sentiments, and the Canadian cannabis giant’s performance on the stock market…

Read more »

edit Jars of marijuana
Cannabis Stocks

Why Canopy Growth (TSX:WEED) Stock Plunged 19% Last Week

Canopy Growth Corp. (TSX:WEED)(NASDAQ:CGC) stock has plunged after the release of its final fiscal 2022 results.

Read more »

Cannabis stocks have fallen.
Cannabis Stocks

Why Aurora Cannabis (TSX:ACB) Stock Tanked 45% Last Week

There's no respite for Aurora Cannabis investors!

Read more »

Money growing in soil , Business success concept.
Cannabis Stocks

TFSA Investors: This Undervalued Gem Could Turn $6,000 Into $25,000

Here's why TFSA investors can hold undervalued growth stocks such as Verano in their portfolios right now.

Read more »