Curaleaf Holdings Inc: A New Reason to Consider This $4.65 Pot Stock

Time to Check Out CURLF Stock

It’s no secret that, ever since Massachusetts voted to legalize recreational marijuana in 2016, pot companies have been vying for a piece of the action. One company that just made big progress in capitalizing on this new market is Curaleaf Holdings Inc (OTCMKTS:CURLF, CNSX:CURA).

If you’ve been following the cannabis industry, Curaleaf should be a familiar name. While the company is listed on the Canadian Securities Exchange, it is one of the leading vertically integrated multi-state cannabis operators in the United States.

And it’s quite convenient for American investors to buy Curaleaf stock because the company trades over the counter.

Of course, being a well-known pot stock isn’t always a good thing these days. The cannabis stock market enjoyed a huge rally in the first quarter of this year, but starting with the second quarter, there has been a serious sell-off.

To give you an idea, the North American Marijuana Index plunged by almost 60% since the beginning of April. (Source: “Marijuana Index,” The Marijuana Index, last accessed November 6, 2019.)

Under the prevailing bearish sentiment toward the cannabis industry, it shouldn’t come as a surprise that Curaleaf Holdings Inc is also a heavily sold-off ticker. During the same period, CURLF stock is down by almost 50%.

But don’t just cross this beaten-down pot stock off your watch list. As I said, the company has some good news about the recreational weed side of its business.

On November 4, Curaleaf Holdings announced the launch of its first recreational marijuana dispensary in the state of Massachusetts.  (Source: “Curaleaf Launches Its First Adult-Use Operations in Massachusetts,” Curaleaf Holdings Inc, November 4, 2019.)

The new dispensary is co-located with the company’s current medical marijuana retail location in Oxford, which has been operating since April 2018.

“Providing high quality and reliable products to patients and customers in our home state of Massachusetts is important to us,” said the company’s Chief Executive Officer Joseph Lusardi.

“We’ve enjoyed a great relationship with the people of Oxford and the surrounding towns, and we look forward to strengthening our partnership with those communities.” (Source: Ibid.)

This is a big deal for Curaleaf.

The Bay State started allowing recreational pot sales in November 2018. In just the first six months of operations, recreational pot sales had reached almost $140.0 million in Massachusetts. (Source: “Chart: Massachusetts recreational marijuana sales approach $140 million,” Marijuana Business Daily, June 11, 2019.)

Being able to open a recreational weed dispensary in the state should help Curaleaf better tap into this booming market.

And that would just be a start. Curaleaf Holdings Inc has also been granted approval for two provisional licenses to open recreational pot dispensaries in Ware and Provincetown, Massachusetts.  (Source: Curaleaf Holdings Inc, November 4, 2019, op. cit.)

It’s safe to say that the company’s presence in the Bay State’s recreational pot market is only going to expand from here.

Curaleaf Already Running a Fast-Growing Business

Mind you, the opening of a new dispensary is not the only reason why investors should check out Curaleaf stock. A more important reason is that, despite being an out-of-favor ticker, the company’s business is still growing.

In the second quarter of 2019, Curaleaf Holdings Inc generated $48.5 million of revenue, representing a whopping 231% increase year-over-year. (Source: “Curaleaf Reports Second Quarter 2019 Financial and Operational Results,” Curaleaf Holdings Inc, August 27, 2019.)

The company also generated $3.4 million in adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), which again represented a substantial year-over-year improvement because, in the second quarter of 2018, its adjusted EBITDA was negative $3.8 million.

Still, like we see with a lot of down-and-out pot stocks, Curaleaf’s earnings report was not perfect.

In particular, investors weren’t happy with the company’s bottom-line number: Curaleaf reported a net loss of $0.05 per share in the second quarter of 2019, which was much wider than its year-ago period net loss of $0.01 per share.

Curaleaf Holdings Inc (OTCMKTS:CURLF) Stock Chart

Chart courtesy of StockCharts.com

Analyst Take

Curaleaf Holdings Inc has already established a solid presence in America’s cannabis industry. The company operates 49 dispensaries, 14 cultivation sites, and 13 processing sites in 12 states. It is well positioned to capitalize on the booming legal pot market.

The next thing to watch for with CURLF stock is the company’s third-quarter 2019 earnings report, which is scheduled to be released on November 19 after market close. If the numbers turn out to be better than expected, it could give investors another reason to warm up to Curaleaf stock.