Trulieve Cannabis Corp: Undervalued Pot Stock Reports Record Q1 Results

Trulieve Stock Has 320%+ Upside

Trulieve Cannabis Corp (CNSX:TRUL, OTCMKTS:TCNNF) is an excellent U.S. pot stock I’ve been following for a while now. Like the broader cannabis industry, TCNNF stock has been on a bit of a roller coaster ride.

This volatility has more to do with what’s going on in the cannabis industry than anything worrisome going on with Trulieve Cannabis Corp.

In the run-up to the 2020 election, the Democrats said if Americans wanted recreational cannabis legalized at the federal level, they were the party to do it. Since then, the Democrats haven’t really moved the dial, and the gridlock in Washington has helped drive cannabis stocks lower.

The ongoing volatility in the stock market is also being exacerbated by soaring inflation, rising interest rates, the war in Ukraine, and growing concerns about a recession. Cannabis stocks are getting hit from all sides right now.

That doesn’t mean marijuana companies haven’t been doing well; it’s just not reflected in their share prices. Trulieve Cannabis Corp is a great example of that. The company recently reported record first-quarter results, is opening new dispensaries, is launching new products, and continues to announce acquisitions.

Despite all the positive things going on at Trulieve, its share price has taken a big hit. As of this writing, Trulieve stock is down by:

• 20% over the last month
• 41% over the last three months
• 52% year-to-date
• 63% year-over-year

It’s not all bad news for Trulieve Cannabis Corp investors. Analysts are increasingly bullish on TCNNF stock, providing a 12-month share-price forecast in the range of $27.00 to $60.00 per share. This points to potential gains of 89% to 321% from Trulieve stock.

About TCNNF Stock

Trulieve is a vertically integrated cannabis company with operations in 11 states and a leading market position in Arizona, Florida, and Pennsylvania. (Source: “Investor Presentation / April 2022,” Trulieve Cannabis Corp, last accessed May 20, 2022.)

With its previously mentioned acquisition of Harvest Health & Recreation Inc, Trulieve now has more than 100 stores in Florida alone and more than 160 operated and affiliated dispensaries across the nation. Its portfolio of cultivation and processing facilities covers more than four million square feet.

There are more opportunities for growth.

Last October, Trulieve Cannabis Corp closed on its blockbuster acquisition of Harvest Health & Recreation Inc, making it the largest, most profitable multistate marijuana operator in the U.S. (Source: “Trulieve Completes Acquisition of Harvest Health & Recreation Inc. Creating the Largest and Most Profitable U.S. Cannabis Operator,” Trulieve Cannabis Corp, October 1, 2021.)

With the acquisition, Trulieve significantly increased its business footprint, strengthened its balance sheet, and increased its product selection.

In April 2022, Trulieve Cannabis Corp acquired Greenhouse Wellness West Virginia Dispensaries LLC.

Greenhouse Wellness was awarded a dispensary permit in Martinsburg, WV in January 2021. Trulieve already owns nine other West Virginia dispensary permits, located in many of the state’s most populous areas. (Source: “Trulieve Acquires Greenhouse Wellness West Virginia,” Trulieve Cannabis Corp, April 27, 2022.)

Trulieve Cannabis Corp Reports Q1 Revenue Beat & Reaffirms 2022 Guidance

Trulieve announced that its revenue for the first quarter ended March 31. 2022 increased by 64% year-over-year and four percent quarter-over-quarter to $318.3 million. (Source: “Trulieve Starts Year With Record First Quarter 2022 Results,” Trulieve Cannabis Corp, May 12, 2022.)

The company’s gross profit rallied by 34.5% quarter-over-quarter to $178.2 million. Meanwhile, its gross margin improved from 43.4% to 56.0%.

Trulieve Cannabis Corp reported a first-quarter net loss of $32.0 million, a quarter-over-quarter improvement of 55%. Its adjusted net income was $1.7 million.

The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $105.5 million (33.2% of its revenue), compared to adjusted EBITDA of $100.9 million (33.0% of its revenue) in the fourth quarter of 2021.

Trulieve ended the quarter with $267.0 million in cash. That number was juiced by $45.1 million in cash flow from operations and the closing of $75.0 million of senior secured notes at eight percent, due October 2026.

“We’re off to a great start in 2022, with strong first quarter results underpinned by topline growth and cash flow,” said Kim Rivers, Trulieve Cannabis Corp’s CEO. (Source: Ibid.)

“Once again we did what we said we would do, improving performance with our focus on the customer, hub strategy, branded products, and disciplined capital allocation.”

Trulieve Cannabis Corp’s management reiterated their guidance for 2022, expecting to report revenue in the range of $1.3 to $1.4 billion and adjusted EBITDA in the range of $450.0 to $500.0 million.

Analyst Take

What’s not to love about a beaten-down marijuana stock like Trulieve stock?

The company has been growing its national footprint and launching new products. Moreover, it recently delivered another record quarter of results. Thanks to its strong balance sheet, access to capital, and financial discipline, Trulieve Cannabis Corp believes it will be able to capitalize on market opportunities and see its momentum continue.