Jushi Holdings Inc: Ignored U.S. Cannabis Stock Poised To Triple Again

Jushi Stock Up 411% YoY, Still Undervalued

Jushi Holdings Inc (CNSX:JUSH, OTCMKTS:JUSHF) has been a stealth U.S. pot stock, rising 411% year-over-year. Despite the massive gains, JUSHF stock continues to take a back seat to other U.S. multistate marijuana operators.

Eventually though, Wall Street will likely wake up to the company’s near- and long-term growth potential and send Jushi stock significantly higher in 2021 and beyond.

Back in November, I noted that, thanks to Jushi Holdings Inc’s record financial results and growing U.S. footprint, JUSHF stock could double in 2021. At the time, the stock was trading at $2.75. It has since advanced 158%, and is trading at record levels.

Strong gains indeed, but I think Jushi stock is just getting started. It could easily triple from its current level in the second half of 2021, which implies a share price of $21.33 or higher.

Chart courtesy of StockCharts.com

JUSHF Stock Overview

Jushi Holdings is a multistate owner and operator of cannabis cultivation, processing, and retail licenses. Its targeted footprint includes California, Nevada, Illinois, Ohio, Pennsylvania, and Virginia. (Source: “Investor Presentation: January 2021,” Jushi Holdings Inc, last accessed January 26, 2021.)

As of this writing, Jushi’s operations include 16 retail locations, under the “BEYOND / HELLO” brand. It also operates three cultivation facilities and four extraction and processing plants.

In the states where the company already has operations, Jushi Holdings Inc expects to open an additional 16 retail locations over the near term. It also has plans to enter new states.

The company’s own branded flower, vape, edible, and cannabidiol (CBD) products include “The Lab,” “Nira, ” “Nira+,” and “Tasteology.”

Jushi Opens 16th Dispensary

On January 26, Jushi Holdings opened its 16th dispensary nationally, and its fourth retail location in Illinois: “BEYOND / HELLO Bloomington.” (Source: “Jushi Holdings Inc. to Open Its 16th Dispensary Nationally and Fourth in Illinois: BEYOND / HELLO Bloomington,” Jushi Holdings Inc, January 22, 2021.)

The new BEYOND / HELLO Bloomington is conveniently located near two universities.

A year after Illinois’ recreational marijuana program launched, legal cannabis sales surpassed more than $1.0 billion.

Retail Footprint Expands in California

In mid-January, Jushi Holdings announced that it had entered a definitive agreement to acquire 100% of the equity of Organic Solutions of the Desert, LLC, an operating dispensary in Palm Springs, CA. (Source: “Jushi Holdings Inc. Expands Retail Footprint in California,” Jushi Holdings Inc, January 14, 2021.)

Jushi Holdings also acquired approximately 78% of the equity of a retail license holder located in Grover Beach, CA, with the rights to acquire the remaining equity in the future. Upon completion of the build-out of the new BEYOND / HELLO location in Q3 2021, it will be the fourth and final retail dispensary permitted in Grover Beach.

Jushi Holdings Inc is also moving forward in the merit-based application process as one of only three selected applicants for a storefront retail (and ancillary delivery) permit in Culver City, CA. Jushi expects to open the doors of its Culver City dispensary by the second quarter of 2022.

The three new California locations will be in addition to the company’s BEYOND / HELLO Santa Barbara store, which opened in October 2020.

Q3 Revenue Up 67% Sequentially; Q4 Guidance Raised

Last November, Jushi announced that its revenue for the third quarter ended September 30 increased 67% to $24.9 million. (Source: “Jushi Holdings Inc. Reports Third Quarter 2020 Financial Results,” Jushi Holdings Inc, November 24, 2020.)

The increase was primarily driven by strong revenue growth at the company’s dispensaries in Illinois and Pennsylvania, a partial contribution from the recently acquired Pennsylvania grower-processor permit holder, and improved market conditions in Nevada.

On a same-store sales basis, the company’s revenue increased by about 45%, compared to the second quarter of 2020—excluding two temporarily closed stores in Philadelphia.

Jushi Holdings Inc’s gross profit in the third quarter was $12.3 million, resulting in a gross margin of 49 percent. That was a 64% increase from the second-quarter 2020 gross profit of $7.5 million, which had a gross margin of 50%.

The company reported a third-quarter net loss of $30.0 million, or a loss of $0.31 per share, compared to a net loss of $9.3 million, or a loss of $0.10 per share, in the second quarter.

The $20.7-million increase in net loss in the third quarter was driven primarily by an increase in the derivative warrant liability prompted by the rise of Jushi stock’s price from $1.31 on June 30, 2020 to $2.44 on September 30, 2020.

Jushi Holdings Inc reported third-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.9 million, compared to an adjusted EBITDA loss of $1.2 million for the second quarter of 2020.

As of September 30, 2020, the company had $35.8 million of cash and $7.4 million in short-term investments. Its net working capital at the time was $21.4 million.

Jim Cacioppo, CEO, chairman and founder, commented, “We continued to see strong momentum in the business as we exited the third quarter, and as a result, we expect to see further expansion in revenue and profitability through the balance of the year.” (Source: Ibid.)

Financial Outlook

In terms of Jushi Holdings Inc’s future, Cacioppo said,

As a result of our expectation for continued strong operating results for the remainder of the year, we are increasing our fourth quarter 2020 revenues guidance from $25 to $30 million to $28 to $30 million and expect fourth quarter 2020 Adjusted EBITDA to be between $2.5 and $3.0 million.

(Source: Ibid.)

He continued, “For the first quarter of 2021, we expect revenues to be between $37 and $40 million and Adjusted EBITDA to be between $4.0 to $5.0 million. We are also maintaining our 2021 revenue guidance of $205 to $255 million and our 2021 Adjusted EBITDA guidance of approximately $40 to $50 million.”

Analyst Take

Jushi Holdings Inc continues to be an excellent U.S. multistate cannabis operator. The company reported another outstanding quarter, generating revenue at the high end of guidance and achieving adjusted EBITDA profitability for its first time ever.

The company’s strategic rollout continues with the company opening its first retail dispensary in Virginia and two additional stores in Illinois, as well as further enhancing its newly acquired grower-processor facility in Scranton, PA.

Going forward, management said it expects Jushi Holdings to deliver strong results in the fourth quarter and full-year 2021.

All that bodes well for JUSHF stock.