Cresco Labs, Inc., a company that produces and distributes cannabis products, is an interesting company to watch. It has a market cap of $1.3 billion at the time of writing and a long history of success. The stock price has been relatively stable, but not too stable. Cresco Labs, Inc. is a company that has been around since 2009. It was founded in Denver, CO by brothers Dan and Mark Rabe in 2009 and is one of the first cannabis companies to be publicly traded. Cresco is in the production of cannabis-based products, distributing them to the public, and manufacturing them into other various products. It was one of the first companies to use the CO 2 extraction method for cannabis
Cresco Labs Inc (OTC: CULCF) is a leading supplier of hemp-derived cannabidiol products. After being founded in 2014, Cresco has gained significant traction in the cannabidiol industry by dominating the distribution of cannabis-derived CBD products. With over $70 million in sales in 2017, Cresco is on pace to exceed over $1 billion in revenue in the next five years.Businessman with a business concept for a trade plan.
Cresco Labs shares have high potential and are volatile
Does Cresco Labs Inc (CNSX:CL, OTCMKTS:CRLBF) have what it takes to reach $1.0 billion in revenue by 2021? And would that be enough to put a relatively small society in the upper echelons of marijuana values?
The answer to both questions is yes.
CRLBF shares are up this year. It has risen about 175% in the last 12 months, making Cresco Labs one of the best performing stocks.
Moreover, the company has a relatively small market capitalization of less than $6 billion, which means it still has plenty of room to grow. This small company size, combined with the potential for $1 billion in revenue, is what gets me excited about Cresco Labs stock.
First the figures.
Cresco Labs reported revenue of $178.4 million in the first quarter of 2021. While this is an impressive result, it does not put the company on track to achieve $1.0 billion in revenue by the end of the year. (Source: Cresco Labs announces first quarter 2021 U.S. GAAP financial results, Cresco Labs Inc, June 9, 2021).
While the company’s quarterly revenue growth was not extraordinary (up only 10% from Q4 2020), its annualized revenue was up 168%. The significant growth in revenue is not unusual for Cresco Labs.
And the company doesn’t stand still. The company expanded its operations in Pennsylvania with the opening of its fourth pharmacy in late June (this is Cresco Labs’ 33rd store in the U.S.). (Source: Cresco Labs announces opening of Sunnyside Philadelphia, its fourth dispensary in Pennsylvania and 33rd operating facility in the United States, Cresco Labs Inc, June 21, 2021).
The company has also made several acquisitions, which has allowed it to build momentum to exceed $1.0 billion in revenue by the end of 2021.
And while Cresco Labs Inc. shouldn’t focus on reaching the 10-figure revenue mark, reaching that milestone would boost the marijuana company’s shares.
In addition, the expansion of Cresco Lab Inc. coupled with the launch of new products such as nutritional supplements and vaping products (available in California, Michigan and Illinois) provides a realistic opportunity for the company to reach sales of up to $1.0 billion. (Source: Cresco Labs Diversifies Edible and Vapor Portfolio with Good News Brand Expansion, Cresco Labs Inc, June 9, 2021).
Greg Butler, commercial director at the company, said:
Building on the successful launch of Good News [the brand under which the new products are being introduced], we continue to differentiate the brand, both in our wholesale portfolio and in the markets, with exciting new edible and vape products that highlight the many benefits of cannabis and its role in various social activities.
Graph courtesy of StockCharts.com
Another important characteristic of Cresco Labs stock is that its price to sales ratio is less than five, which is a reasonable ratio in the marijuana market.
This puts the company in an enviable position: Not only does it have excellent financial results, but it is also small enough to grow quickly and strongly.
Add to that Cresco’s expansive mind and presence in the American marijuana market, and you have a very solid title.
The only problem is that the company is more volatile due to its small size and low brand awareness. But it’s inevitable.
Marijuana trading is notoriously volatile. A small company with high expectations exposes investors to even greater risk – but also has the potential to generate much higher returns.
Investors looking for solid marijuana stocks that can generate large profits in a short period of time could do worse than Cresco Labs stock.
On the other hand, investors looking for safer stocks are probably better off looking at one of the big U.S. marijuana companies.
Whatever your personal preference, I would say that of the three stocks in the $1.0 billion club (Cresco Labs Inc, Curaleaf Holdings Inc (CNSX:CURA, OTCMKTS:CURLF) and Trulieve Cannabis Corp (CNSX:TRUL, OTCMKTS:TCNNF)), CRBLF is a good choice, although the other two are probably safer and have lower growth caps.
The actions of Cresco Labs have a lot of potential. The company’s aggressive expansion efforts in the U.S. and its ability to grow revenues are attractive.
However, Cresco Labs Inc. is still a relatively unproven newcomer. Therefore, it probably shouldn’t be considered by the faint of heart or those investing their money for retirement.
Nevertheless, CRLBF stock holds great promise for investors who are not afraid of stress and want to maximize their earning potential. Although I rate the company lower than its U.S. sector peers, I think Cresco Labs stock has the potential to rise in 2021 and beyond.
Frequently Asked Questions
Why is Cresco Labs stock falling 2021?
Cresco Labs stock is falling because the company has been struggling to meet its production goals.
Is Curaleaf a good stock to buy 2021?
Curaleaf is a good stock to buy in 2021. Curaleaf has a one year price target of $14.00, but the company’s shares are currently trading at $11.00.
cresco labs newscresco labs outstanding sharescresco labs stock price after hourscrlbf stockcresco labs nasdaqbuy cresco lab stock,People also search for,Feedback,Privacy settings,How Search works,cresco labs stock forecast 2021,cresco labs news,cresco labs outstanding shares,when will cresco labs go public,cresco labs stock news,cresco labs stock price after hours,crlbf stock,cresco labs joe caltabiano