Green Thumb Industries Inc: Will This $10 Pot Stock Double Again?

One Pot Stock to Think About

Despite its growth potential, the legal cannabis industry is never short of skeptics. They often say that pot stocks would be the first ones to crash when there’s a market sell-off.

And pot stocks did plunge when the stock market tumbled in March. What the skeptics did not predict, though, was that shares of solid marijuana companies were some of the quickest to make a comeback.

Case in point: Green Thumb Industries Inc (OTCMKTS:GTBIF, CNSX:GTII) is a cannabis consumer packaged goods company and retailer headquartered in Chicago, Illinois.

It offers a portfolio of branded pot products, including “Beboe,” “Dogwalkers,” “Dr. Solomon’s,” “incredibles,” “Rhythm,” and “The Feel Collection.” The company is also the owner and operator of “Rise” and “Essence” retail cannabis stores across the country. (Source: “Green Thumb Industries to Open Essence South Durango, Its Fifth Cannabis Store in Las Vegas Area and 48th in the Nation, on June 27,” Green Thumb Industries Inc, June 26, 2020.)

Green Thumb Industries Inc is listed on the Canadian Securities Exchange, but American investors can still get a piece of the action because Green Thumb Industries stock also trades over the counter in the United States.

While the company isn’t listed on a major U.S exchange like some of its peers, it has built a solid presence in the U.S. cannabis industry. Green Thumb Industries currently has 13 manufacturing facilities, licenses for 96 retail locations, and operations in 12 states.

In June, the company opened its “Essence South Durango” store in Las Vegas, marking its 48th cannabis retail location in the country. (Source: Ibid.)

As I mentioned earlier, there was a market-wide sell-off in U.S. equities in March. And many pot stocks, including GTBIF stock, tumbled during that period.

However, as the chart below shows, Green Thumb Industries stock managed to bounce back. In fact, since March 16, it has surged 145%.

Of course, it was hard to be a stock buyer in March, given that everything else was dropping to the floor. But investors who had the guts to load up on the then-beaten-down GTBIF stock would have more than doubled their money.

Green Thumb Industries Inc (OTCMKTS:GTBIF) Stock Chart

Chart courtesy of StockCharts.com

One of the reasons behind Green Thumb Industries stock’s upswing is the company’s fast-growing business.

Green Thumb Industries Inc reported earnings on May 14.

The report showed that in the first quarter of 2020, the company generated $102.6 million of revenue. The amount represented a 35.4% increase quarter-over-quarter and a staggering 267.6% increase year-over-year. (Source: “Green Thumb Industries Reports First Quarter Revenue of $102.6 Million and Adjusted Operating EBITDA of $25.5 Million,” Green Thumb Industries Inc, May 14, 2020.)

Also, considering that the legal pot industry is still at a nascent stage in the U.S., the fact that Green Thumb Industries managed to achieve over $100.0 million in quarterly revenue is quite impressive.

During the first quarter of 2020, the company had a gross margin of 51.6%, representing a sizable expansion from a gross margin of 45.8% in the year-ago period.

The losses narrowed as well. Green Thumb reported a net loss of $4.2 million, or $0.02 per share, for the first quarter of 2020. This compared to a net loss of $14.1 million, or $0.07 per share, for the fourth quarter of 2019.

As for COVID-19, the company said that, in all of its operating markets, it has seen robust consumer demand despite the pandemic.

“The positive feedback we have received from communities and regulators, coupled with strong consumer demand, even in the face of COVID-19, validates the essential reality of the cannabis industry,” said Green Thumb’s founder and chief executive officer Ben Kovler in the latest earnings release. (Source: Ibid.)

Analyst Take

Pot stock bears can say what they want, but GTBIF stock has shown its resilience in this pandemic.

As the U.S. economy starts to recover, I wouldn’t be surprised to see Green Thumb Industries Inc continue to outperform.