Trulieve Cannabis Corp Up 156% in 2020; More to Come?

Trulieve Stock Soars on Record Q3 Results & Expansion

Trulieve Cannabis Corp (CNSX:TRUL, OTCMKTS:TCNNF) continues to be one of the best U.S. pot stocks. TCNNF stock is up 132% year-over-year, 156% year-to-date, and 25% since the U.S election.

The S&P 500, meanwhile, is up approximately 18% year-over-year and 14% year-to-date. ETFMG Alternative Harvest ETF (NYSE:MJ), the world’s largest cannabis exchange-traded fund (ETF), is down one percent year-over-year and seven percent year-to-date. That said, it’s up a whopping 43% since the November election.

Cannabis stocks have rallied since President-elect Joe Biden won the election. Not only have many Democrats said they want to legalize or decriminalize marijuana, all five states that had cannabis legalization initiatives on their ballots (Arizona, Montana, New Jersey Mississippi, and South Dakota) saw those initiatives pass. Other states, like New York, are expected to follow suit in 2021.

On top of that, an increasingly larger part of the U.S. population, 68%, is in favor of legalizing medical and recreational marijuana. That’s the highest percentage on record.

Furthermore, on December 4, the House passed sweeping legislation that would decriminalize marijuana and erase nonviolent marijuana-related convictions. The measure, however, is expected to fail in the Senate, which is dominated by the Republicans.

Still, Republicans, appearing out of step with the broader U.S. electorate, will be under pressure to soften their stance on cannabis. More and more of their own voters want to see marijuana legalized.

Even states that went Republican in the election have embraced cannabis legalization. In South Dakota, 54% of voters gave a thumbs up to legalizing marijuana, but only 36% voted Democrat. In Montana, 57% voted in favor of legalizing marijuana—the same percentage that voted Republican. Mississippi, meanwhile, saw 62% vote to legalize medical marijuana. In that state, Donald Trump captured 58% of the vote.

All this is great news for the U.S. cannabis industry.

Even before the election, Trulieve stock was an excellent pot stock. Trulieve Cannabis Corp has a strong balance sheet, a big cash position, and consecutive quarters of profitability and revenue growth. Moreover, the company has launched a line of edibles, expanded its business footprint, and provided strong guidance.

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TCNNF Stock Overview

Trulieve is the leading medical cannabis company in Florida, the third most populous state in the country. The seed-to-sale firm has 67 stores in the Sunshine State and has captured approximately 51% of the Florida market. (Source: “Overview,” Trulieve Cannabis Corp, last accessed December 14, 2020.)

With more than 70 stores nationwide, Trulieve has been actively expanding its operations. The company operates in California, Massachusetts, Connecticut, and Pennsylvania. It has also been awarded a processor license in West Virginia.

On December 7, Trulieve Cannabis Corp announced the opening of a new marijuana dispensary in Clermont, FL—the company’s 73rd location. (Source: “Trulieve Opens First Dispensary in Clermont,” Trulieve Cannabis Corp, December 7, 2020.)

The Clermont announcement came less than three weeks after the company announced the opening of a dispensary in Lake City, FL—the first in Columbia County.

Record Third-Quarter Results

On November 17, Trulieve announced that its revenue for the third quarter ended September 30 jumped 93% year-over-year and 13% quarter-over-quarter to a record $136.3 million. (Source: “Trulieve Achieves Record Third Quarter Results, Enters 6th State,” Trulieve Cannabis Corp., November 17, 2020.)

The company reported third-quarter net income of $17.4 million, or $0.15 per share. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were up 83% year-over-year and 12% sequentially at $67.5 million, or 50% of its revenue.

This represents the company’s 11th quarter of consecutive growth and profitability.

Trulieve ended the third quarter with cash and cash equivalents of $193.4 million.

During the quarter, the company entered two additional states, introduced a line of edibles, announced an acquisition in Pennsylvania, and was awarded a processor license in West Virginia. Also in the quarter, Trulieve opened nine stores, achieving its 2020 goal of opening 68 stores nationwide.

Analyst Take

As discussed earlier, the U.S. election provided strong tailwinds for the U.S. cannabis industry, but Trulieve stock was an excellent pot stock well before that.

Trulieve Cannabis Corp reported record third-quarter results, achieving its 11th consecutive quarter of growth and profitability. Furthermore, the company has a massive cash position, which should allow it to continue to report stellar growth in the coming years.