Why is Green Thumb so Cheap?

Cannabis investors need to chill.

Andrew Willis 11 June, 2021 | 4:28AM
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Andrew Willis: Each week we talk about a stock that we think is too cheap – and why!

Green Thumb is one of the largest cannabis pure plays in the U.S. It’s continuing to open new dispensaries and grow profits – yet it’s undervalued. Why?

Part of it is impatience… although we’ve had some promising developments recently in federal legislation and state legislation, there had to be a lull at some point. Sector director Kristoffer Inton reminds investors that the growth in state legalization and dispensaries opening is… ‘lumpy’.

There’s a lot of noise and uncertainty around whether this green giant can meet growth expectations – which we peg at around 25% annually. But even after taking into account a very high level of uncertainty, shares look very undervalued.

Revenues are up 90% for the last quarter, margins nearing 60%, and strong expansion within states. We think the market may be overly focused on federal laws, and can’t see the trees, for the forest.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Green Thumb Industries Inc34.75 CAD1.88Rating

About Author

Andrew Willis

Andrew Willis  is Content Editor for Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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