Rising Potentials: Cannabis Stocks with Upside to Explore in May
The cannabis sector in the United States has made headlines in recent years, and one component that has gotten a lot of attention is the realm of marijuana stocks. As the legal framework surrounding cannabis evolves, investors are becoming more attracted to the intriguing possibilities of this expanding business.
Despite marijuana’s growing popularity, financial institutions have experienced major challenges in offering banking services to cannabis-related firms. This issue inspired the adoption of the SAFE Banking Act, ground-breaking legislation that intends to address the challenges experienced by cannabis entrepreneurs and the financial sector. In this article, we look at marijuana stocks in the US cannabis business and consider the consequences of the SAFE Banking Act.
In recent years, the cannabis sector in the United States has undergone a dramatic shift, with an increasing number of states legalizing both medicinal and recreational marijuana. Recreational marijuana is currently legal in 18 states, while medical marijuana is legal in 36. In general, this quick growth has resulted in a huge increase in investor interest as people and institutions attempt to benefit from the rising demand for cannabis products and services.
In May, many top marijuana stocks showed some upward momentum. These stocks could continue to see an upside in Q2 2023. Look at 3 top cannabis stocks for your watchlist heading into June.
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Top US Marijuana Stocks Showing Gains Last Week
- Ayr Wellness Inc. (OTC: AYRWF)
- Columbia Care Inc. (OTC: CCHWF)
- IM Cannabis Corp. (NASDAQ: IMCC)
Ayr Wellness Inc.
Ayr Wellness Inc. is a well-known cannabis company situated in Florida. Florida is home to 60 of the company’s 70 marijuana-related operations. To expand into Illinois, the company purchased Herbal Remedies Dispensaries, LLC. Adult marijuana use could boost its popularity in Ayr’s Massachusetts-based firms. The company has opened its sixth linked dispensary in Pennsylvania. After gaining regulatory approval from Arizona, Ayr planned to begin its 86,000-square-foot processing and growing facility in December. The firm invested substantially in the beverage market by acquiring Levia Cannabis Infused Seltzer in 2022.
According to AYR data, revenue for the first quarter of 2023 was up 18% Y/Y to $117.7 Million, up 3% sequentially. In addition, excluding discontinued operations, Adjusted EBITDA up 64% Y/Y to $26.3 Million, up 9% sequentially (GAAP loss from operations was $21.7 Million, compared to $21.0 Million in Q1/22). The company opened seven new stores in Florida since the beginning of 2023, bringing AYR’s total footprint to 60 dispensaries across the state. The Company plans to open an additional ten new stores in 2023 for 70 stores at year-end.
The Company anticipates second-quarter revenue and Adjusted EBITDA1 to grow in line with Q1 sequential growth trends. AYR also reiterates its expectation of generating positive cash flow from operations for the full year 2023, although operating cash flow trends will not be linear, given the timing of tax payments.
AYRWF Stock Performance
AYRWF stock closed on May 19th at $1.23, up 95.24% in the last month of trading. Currently, the stock has a 52-week price range of $0.5660-$6.75 and is down 2.50% year to date. According to analysts at CNN Business, AYRWF stock has a 12-month average price target of $7.18 per share. In this case, this would represent an upside of 483.51% from the last price of $1.23.
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Columbia Care Inc.
Columbia Care Inc.’s region in the New York area could significantly expand. The firm, one of the largest cannabis growers on the East Coast, recently purchased a 34-acre Long Island facility. Columbia Care now has 131 locations, including 18 locations in the United States, 95 dispensaries, and 33 growing and processing facilities. In addition, the company will open a marijuana dispensary at its first location in Missouri in October 2021. The corporation is aware of the site of Virginia’s third gLeaf dispensary. Cresco Laboratories Inc. (OTC: CRLBF), the largest MSO in the US, purchased Columbia Care on March 23 for a total enterprise value of $2 billion.
Columbia Care reported first-quarter 2023 revenue of $125 million, a 1% increase year over year, on May 15th. In addition, the company had a quarterly gross profit of more than $47 million, a 13% rise year on year. Columbia Care achieved a quarterly Adjusted EBITDA1 of more than $16 million, with an Adjusted EBITDA margin1 of more than 13%. In the first quarter of 2023, the firm launched two facilities in Virginia (Hampton and Colonial Heights) and one in West Virginia; Virginia continues to be a top market in sales and Adjusted EBITDA. Following the end of the quarter, the company launched one more site in Norfolk, Virginia, bringing the total number of operating stores to 85.
CCHWF Stock Performance
CCHWF stock closed on May 19th at $0.4751, up 28.30% in the last five days of trading. Currently, the stock has a 52-week range of $0.3550-$2.23, down 36.65% year to date. According to analysts at Tip Ranks, CCHWF stock has a 12-month average price target of $1.11 per share. In this case, this is an upside of 133.64% from its last trading price of $0.4751.
[Read More] Best US Marijuana Stocks For May 2023 Watchlist
IM Cannabis Corp.
IMC operates in Israel, Germany, and Canada and is a global pioneer in the medical and adult-use recreational cannabis industry. According to the company, the Israeli medical cannabis market has accomplished a key milestone as a result of the IMC brand. IMC’s medical marijuana product line is expanding. Adjupharm, a subsidiary with a German headquarters and an EU-GMP-certified medicinal cannabis distributor, represents the company throughout Europe. The company has made significant announcements on the opening of a cutting-edge logistics facility in Germany. With the help of this facility, Adjupharm will be able to optimize its supply chain in the future by repackaging cannabis in large quantities.
Revenues for the first quarter of 2023 were $13.2 million, up from $13 million in the first quarter of 2022, a 1% increase. In addition, gross profit for the first quarter of 2023 was $3.5 million, up 46% from $2.4 million in the first quarter of 2022. The growth is primarily due to higher high-margin sales of imported premium cannabis products and lower sales costs. Gross margin before fair value adjustments was 30% in the first quarter of 2023, up from 24% in the previous quarter, a 25% increase. The company sustained an operating loss in the first quarter of 2023 of $3.0 million, compared to $8.9 million in the first quarter of 2022, a decrease of 66%.
IMCC Stock Performance
IMCC stock closed at $1.03 on May 19th, up 47.84% in the past month of trading. The stock has a 52-week price range of $0.59-$11.50 and is up 5.66% year to date. According to analysts at CNN Business, IMCC stock has a median price target of $1.11 per share. In this case, this would represent an upside of 9.82% from its last trading price of $1.03.
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Investing In Top Pot Stocks For 2023
US marijuana stocks represent an interesting opportunity for investors seeking exposure to the thriving cannabis market. In addition, investors can position themselves to profit from the expanding market and potentially reap big rewards with careful deliberation, comprehensive research, and a long-term view. As the cannabis green wave grows, people that approach the industry with caution and discernment may find themselves at the forefront of a rewarding investment path.
In general, it is essential to approach marijuana stock investment with prudence and a thorough understanding of market dynamics. The industry continues to encounter regulatory obstacles and uncertainty at the federal level, which can impact stock prices and the market mood. Additionally, not all cannabis companies are the same, and rigorous study is required to find those with good fundamentals, effective business strategies, and a competitive edge.
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