Estimated read time: 3 minutes
Publication date: 10th Nov 2020 10:11 GMT+1
The results for the U.S. Presidential elections are out and Joe Biden has won a tightly fought race. Now investors can profit from the election and identify stocks that will be well served and profit handsomely in a Biden-led administration.
During one of the pre-election debates, Vice-President elect said the Democrats would decriminalize or even legalize marijuana at the federal level in the U.S. This make it easy for cannabis companies to get access to traditional sources of capital and a rapidly expanding market.
Here we look at three such pot stocks that should trade higher in the upcoming days.
A Canadian cannabis giant
The first stock on this list is Canadian marijuana heavyweight Aphria (NYSE: APHA) which is one of the most profitable companies. It has in fact reported a positive EBITDA for six straight quarters and ended the most recent quarter with $400 million in cash
Aphria recently agreed to acquire one of the largest craft brewers in the U.S. which is Sweetwater Brewing Co. which will help it gain traction in the cannabis-infused beverages space. This acquisition is valued at $300 million and Aphria expects the deal to be immediately accretive to EBITDA and EPS.
Aphria stock is also trading at a cheap price to sales multiple of 3.5x and has a price to book value of 1.1x. It has a market share of 14% in Canada’s cannabis market and grew sales by 16% to CA$145.7 million in Q1 of fiscal 2021.
Further, experts believe Aphria can sell over 80,000 kgs of cannabis per year based on annualized figures for Q1 of 2021. Comparatively, its total production capacity on an annual basis is 110,000 kg making Aphria one of the more optimal and efficient pot producers in Canada.
APHA stock is up 19% in the last week.
A multi-state operator
The future looks significantly bright for U.S. based multi-state operator Green Thumb Industries (OTC: GTBIF). This stock has gained 24% in the last week, 106% since the start of 2020 and 144% since going public in June 2018.
Green Thumb Industries has a massive presence in Illinois and is fast gaining a foothold in Nevada, two states that are forecast to generate over a billion dollars in annual since by 2024. The company has 49 dispensaries in 12 states and has a robust portfolio of medical and recreational marijuana products.
In the June quarter, Green Thumb increased sales by 167% to $119.6 million while EBITDA jumped by a staggering 1,400% to $35.4 million as well. It owns licenses to open 96 retail stores giving it enough room to enter new markets as well.
A cannabis-focused real estate investment trust
The third stock on the list is medical-marijuana focused real estate investment trust (REIT), Innovative Industrial Properties (NYSE: IIPR). This stock is a top pick for income and growth investors. It has returned over 30% in last week, over 100% in 2020 and 760% since its IPO in December 2016, easily outpacing the S&P 500. IIPR also has forward yield of 3.1%.
In Q3, IIPR reported sales of $34.3 million, indicating a year-over-year growth of 197%. Its net income and funds from operations also rose by 205% and 192% respectively to $18.9 million and $27.9 million.
Further, the company’s earnings and AFFO per share rose 56% and 49% respectively in Q3 to $0.86 and $1.28. In Q3, the REIT invested $180 million to acquire five properties in the U.S. and continues to focus on expansion to drive top-line growth.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
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