Gordon JamesCannabis stocks have been on a tear lately, surging to new highs and setting off frenzied trading. The company behind the most recent cannabis stock is hoping that its product will be able to rival tobacco companies in North America as it enters the legal market there.
The “best marijuana’s stocks 2022” is a cannabis stock that is expected to be the best in 2022. This company has been around for over 3 decades, and they are still going strong. The company has gained popularity with their innovative products, such as their top-selling vaporizer pen.
If you’re searching for a growth company with a discount pricing, now is the time to look at my top cannabis stock for 2022.
- One of the fastest-growing corporations in the United States is this early industry leader.
- Sales in the third quarter more than quadrupled from the previous year.
- Shares are now selling at a discount of more than 50% to their 52-week high — an unusual discount for a growth company like this.
This company is poised for a strong comeback in 2022, with shares selling at a substantial discount to sales growth. As a result, this is my top cannabis stock for the year 2022.
Verano Holdings, Inc. (CSE: VRNO, OTC: VRNOF) was created in 2014 and has swiftly risen to become one of the top five cannabis firms in the United States, with a market capitalization of $3 billion.
Verano is a cannabis company based in Chicago, Illinois, with a diverse portfolio of cannabis licenses, manufacturing facilities, and shops.
- It is active in 11 states.
- There are 89 dispensaries in total.
- 11 facilities for farming and processing
- More than 1 million square feet of manufacturing space in the United States
*Photo courtesy of Verano’s investor presentation.
Verano has been achieving big-time revenue growth with its amazing portfolio of cannabis businesses.
The third-quarter figures, which were released in mid-November, revealed massive revenue increases over the previous year. Verano also made a profit, which is a good sign of the company’s financial health. Here are some additional Verano information.
- Revenues were $207 million, up from $199 million in the second quarter and $101 million a year earlier, reflecting a 4 percent sequential increase and a 106 percent year-over-year increase.
- On an unadjusted basis, excluding the effect of biological assets, gross profit climbed by 33% sequentially to $133 million, or 64% of sales, compared to $100 million, or 50% of revenue, in the second quarter of 2021.
- In the third quarter, adjusted EBITDA was $111 million, or 54% of sales, up from $81 million, or 41% of revenue, in the previous quarter. Unadjusted EBITDA for the third quarter was $107 million, or 52 percent of sales.
- SG&A costs were $32 million, or 15% of sales.
- Net income was $104 million, including the effect of biological assets. Net income was $15 million in the third quarter of 2021, compared to $32 million in the second quarter of 2021, excluding the effect of biological assets.
- Cash flow from operations was $68 million, including $35 million in free cash flow.
Despite the positive findings, Verano’s stock has plummeted in 2021. Verano started listing on the Canadian Stock Exchange in February, and since then, the company’s stock has fallen by 52 percent. Take a look at the graph below for 2021.
I see two explanations for the stock market’s steep decline in 2021, both of which I believe will be transitory.
In the year 2021, cannabis stocks soared. Short-term investors, on the other hand, pocketed gains in the first half of the year, causing a significant decline.
After the Democrats won control of the White House and Congress in the second part of the year, investors got disappointed with the lack of movement on legalizing.
Both of these circumstances, in my opinion, are just transient. Looking forward, I believe Verano will make a strong comeback in 2022 as a result of three major triggers.
In 2022, Verano will benefit from three powerful catalysts.
#1 – Shares are 50% lower than their 52-week high.
Verano’s stock is now on sale, selling at a 52 percent discount to its 52-week high. On the US ticker VRNOF, I also notice a critical level of support that has emerged between $10 and $12.
Verano seems to be forming a long-term bottom at this level, laying the groundwork for a reversal and fresh upward trend. Take a look at the graph below for 2021.
#2 – In 2022, sales should be brisk.
Verano’s revenue is unlikely to expand by 106 percent again, but the business could expect significant sales growth in 2022.
Analysts predict full-year sales of roughly $1.5 billion, up from a forecast full-year revenue of around $1 billion in 2021.
Verano’s recent expansions and acquisitions will be the driving force behind this revenue increase. From a Verano news release, here are a few specifics.
- Verano increased its retail reach in the third quarter, opening seven new dispensaries in Florida, Ohio, and Pennsylvania, including the first Zen Leaf shop in Philadelphia and a flagship drive-through facility in Pittsburgh.
- The Company completed its acquisitions of Agri-Kind and Agronomed, which introduced active cultivation and production to its Pennsylvania retail base while also increasing its retail reach. As a result, the company already operates 12 dispensaries in Pennsylvania, with the potential to build six more locations and a second large-scale growing facility, which is now under development.
- With the purchase of Mad River Remedies in Dayton, the Company increased its retail base in Ohio to five dispensaries.
- Sierra Well has been acquired by the Company, which will increase distribution in Nevada by adding two high-volume dispensaries in Reno and Carson City, as well as an additional 10,000 square feet of cultivation and manufacturing capacity in Reno, bolstering the Company’s supply chain in Northern Nevada.
- The company announced three accretive acquisitions in Connecticut in November, including two operating dispensaries and one cultivation and production facility with a total area of 217,000 square feet. By speeding vertical integration ahead of the state’s shift to adult-use sales, the acquisitions will position the company for long-term success.
#3 – In comparison to other growth stocks, Verano is substantially undervalued.
After severe falls in 2021, cannabis companies and Verano are valued as deep bargain stocks.
Verano has a price-to-sales ratio of 2X based on estimated revenue in 2022. That is absurdly cheap for a growth business like Verano, as seen by comparisons to comparable growth firms.
Tesla, for example, is expected to generate $70 billion in sales by 2022. Tesla has a forward price-to-sales ratio of 14X, which is 600% higher than Verano, with a market value of $1 trillion. That implies Verano shares would be 600% greater in value if they had the same price-to-sales ratio as Tesla. In 2022, I believe this value will attract a large number of investors.
A Bigger Picture
Following a year of weakness in 2021, 2022 seems to be shaping up to be a recovery year for the cannabis industry.
With that background in mind, I anticipate Verano becoming a standout performance. Three major triggers, including significant revenue growth, could help the firm.
Meanwhile, the stock is selling at a significant discount to its 52-week high. It’s a once-in-a-lifetime chance to acquire a high-growth company at a huge discount.
Verano Holdings, Inc. is owned by author Michael Vodicka (VRNO)
The “american cannabinoid clinics stock” is a cannabis company that has been in the market for over 20 years. It is the number one cannabis stock for 2022.
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Gordon James
