If you’re looking for a cannabis stock with plenty of upside potential, look no further than Chicago-based Green Thumb Industries (Green Thumb Industries Stock Quote, Chart, News CSE:GTII), says Beacon Securities analyst Russell Stanley.
The analyst delivered an update on Green Thumb to clients on Tuesday, saying GTI’s position continues to strengthen in home state Illinois.
US cannabis MSO Green Thumb, which has 13 manufacturing facilities, licenses for 96 retail locations and operations across 12 US markets, announced on Tuesday the opening on May 28 of Rise Niles, the company’s eighth store in Illinois, and 45th in the country.
Rise Niles makes three adult-use openings in the state of Illinois this year and now six new stores in 2020 across the US.
Speaking to the opening as well as the company’s response to the COVID-19 crisis, CEO and founder Ben Kovler said, “We have continued to move forward through the ongoing COVID-19 crisis to provide jobs and much needed access to well-being through the power of cannabis during these difficult times, as demonstrated by the opening of Rise Niles, our fourth opening since the crisis began. Our retail team has pivoted quickly and efficiently as regulations evolve and we are profoundly grateful for their dedication and service to our customers.”
The company noted the continuing strength of the Illinois adult-use market, which commenced in January, quoting April’s total adult-use sales of over $37 million, which were better than the previous two months and leading to a total of $148 million since January 1. (All figures in US dollars except where noted otherwise.)
In his coverage, Stanley pointed out that Illinois’ April sales were up four per cent month-over-month growth in both its adult-use and medical sales.
“The company is licensed to add two more adult-use only retail locations in this state, and we remain optimistic that the medical-only location in Naperville may be converted to a combined medical/adult-use store at some point in 2020. GTII also operates two of just 21 licensed cultivation/manufacturing operations in Illinois (Rock Island, Oglesby), both of which are currently being expanded. These initiatives position GTII very well for continued wholesale and retail growth in the company’s home market,” Stanley wrote.
By his estimates, Stanley called GTI the free cash flow leader based on first quarter numbers from US MSOs so far at $14 million for its Q1, released earlier this month. The analyst said he expects Green Thumb to be cash flow from operations positive for every quarter this year, leading to 2020 CFO of $73 million. For the year, Stanley is calling for revenue of $453 million and attributable EBITDA of $132 million, while for fiscal 2021, he is estimating $760 million in revenue and $272 million in attributable EBITDA.
Stanley calculates GTI to be currently trading at a 34 per cent discount from its US operator peer average and at a 41 per cent discount to its broader peer group.
Stanley concluded his update by saying, “The stock has very strong momentum that should carry it through the test of an important resistance zone.”