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 Inc15.40 CAD-1.22Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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