5 Cannabis Stocks That Are Better Picks Right Now Than Sundial Growers

There are a lot of cannabis stocks that have been making a lot of noise in the past few months. Some of them have been going up, and some of them have been going down. Sundial Growers (CSE:SUND, OTC:SNDLF) (CSE:SUN) is one of the more exciting cannabis stocks right now, and has been making a lot of noise in the past few months. Sundial Growers is a licensed cannabis grower that is producing and selling its medical-grade cannabis in the United States.

Sundial Growers Inc (CSE: SUN) (OTCQX: SNDLF) (FRA: 2S8) has been on a roll lately, as it scooped up two new mega-grow projects in the last week. And with the Canadian Marijuana Company Index (TSX.V: MJ) at just over a $1B market capitalization, Sundial is now one of the top four marijuana stocks on the TSX.

There are many cannabis stocks on the market right now, but the best performing picks so far have been Sundial Growers (TASE: DSGX) and Cannmart (TASE: CANM). Sundial is best known for its medicinal cannabis products, and its flagship brand, CHUM, is one of the most widely-recognized brands in Canada. CannMart on the other hand, is a specialist medical marijuana producer with the goal of becoming a leading supplier to the Canadian medical market. The company has a wide range of products available, from dried cannabis flowers to cannabis extracts, and recently announced plans to set up a cannabis oil manufacturing facility in Saskatchewan. CannMart’s shares are trading at an all-time high, and are currently

Points to Remember

  • Because they currently operate in the lucrative U.S. cannabis industry, these five cannabis companies have greater growth potential than Sundial.
  • All five continue to outperform Sundial in terms of sales growth and are either profitable or close to becoming profitable.
  • Sundial is the most expensive of the five, with four of the five having more appealing values.

On Robinhood’s (NASDAQ:HOOD) trading platform, seven marijuana companies are among the top 100 most popular stocks. Only one of them, Sundial Growers, is in the top ten on the list (NASDAQ:SNDL). Sundial came in fourth place, beating out a number of bigger and more successful businesses. 

This year, the Sundial has been a clear winner. Even though it has given up most of its first-quarter gains, the stock is still up more than 50%. However, I don’t believe it is the greatest marijuana stock to invest in for the future. Here are five cannabis stocks to consider instead of Sundial Growers right now.

Cannabis leaf on top of hundred dollar bill.

GETTY IMAGES is the source of this image.

Five simple options

Innovative Industrial Properties (NYSE:IIPR) would be at the top of my list. The business is structured as a real estate investment trust (REIT) and focuses on the medicinal cannabis sector in the United States. IIP presently has 73 properties in 18 states and plans to acquire more in the near future. It also has a high dividend yield of more than 2.4 percent.

Sundial was easily beaten by many major US multi-state operators (MSOs), in my opinion. Cresco Labs (OTC:CRLBF) is a major cannabis distributor. It also has 34 cannabis retail outlets in ten states, including six of the country’s top seven cannabis marketplaces.  

Green Thumb Industries (OTC:GTBIF) is another of the country’s largest MSOs. In the second quarter, the business has 58 cannabis retail shops spread throughout 11 states. Since the end of the second quarter, Green Thumb has completed an acquisition to join the Virginia cannabis market and expanded its retail footprint to 62 sites.

 

A few of up-and-coming MSOs also appeal to me. Ayr Wellness (OTC:AYRW.F) already has six states under its belt. Once the company’s planned acquisition of Garden State Dispensary complete, a significant seventh market, New Jersey, will be added to the list. 

Jushi Holdings (OTC:JUSHF) operates 20 retail cannabis shops, including 13 of them in Pennsylvania. The business is one of just a few in Virginia having operations in the northern portion of the state, which may be a very profitable market. 

They have something in common

Ayr, Cresco, and Green Thumb, three of these five companies, were recently rated strong buys by Jefferies Financial Group analyst Owen Bennett. However, they also have a few additional characteristics in common that I believe make them better choices than Sundial Growers.

Above all, they’re all based in the United States. Sundial, on the other hand, is unable to join the U.S. cannabis market while maintaining its listing on a major U.S. stock exchange since marijuana remains illegal at the federal level.

 

They’re also all continuing to outperform Sundial in terms of sales growth. In fact, Sundial’s sales fell year over year in the most recent quarter. In the meanwhile, Jushi’s sales more than quadrupled year over year in the second quarter. In their most recent quarterly reports, Innovative Industrial Properties and Cresco both reported revenue that had more than quadrupled year over year. Green Thumb’s income increased by 85%. Ayr came in bottom, with income increasing by “only” 74% year on year.

Sundial lost $52.3 million in Canadian currency in the second quarter. Innovative Industrial Properties, Cresco, and Green Thumb, on the other hand, are lucrative. In their most recent quarterly reports, Ayr and Jushi both recorded losses, although their bottom lines looked considerably better than Sundial’s.

Then there’s the question of value. Ayr, Cresco, Green Thumb, and Jushi (the four MSOs in my selections) trade at forward price-to-sales (P/S) multiples in the single digits. Sundial is the only company that claims to have a higher forward P/S ratio than Innovative Industrial Properties. On almost every other metric, though, the firm outperforms Sundial.

Popularity isn’t everything

You may be wondering why Sundial is the most popular marijuana stock among Robinhood investors when there are so many other options that are clearly superior. The main reason for this is because most OTC stocks aren’t accessible on Robinhood. This implies that Robinhood users will be unable to purchase Ayr, Cresco, Green Thumb, or Jushi on the platform.

 

Robinhood investors, on the other hand, may purchase Innovative Industrial Properties. To some, a REIT may not be as interesting as a Canadian cannabis company. Innovative Industrial Properties, like the four MSOs on my list, has greater growth potential, quicker revenue growth, and excellent profitability, therefore I believe it is a better choice than Sundial.

There is no doubt that the marijuana industry is one of the fastest growing industries in the United States. If you are familiar with cannabis products such as edibles, extracts, or oils, then you already know how popular the industry has become. However, in the past few years, the marijuana industry has also seen an increase in the amount of cannabis companies entering the market. This means that more and more companies are offering a variety of cannabis products, which in turn makes it difficult to choose which products to invest in.. Read more about sundial growers news and let us know what you think.

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