Walrus Images
Cannabis research firm Zuanic & Associates said it was bullish on Verano (OTCQX:VRNOF), MariMed (OTCQX:MRMD), Planet 13 (OTCQX:PLNH) and Green Thumb Industries (OTCQX:GTBIF), considering the four stocks are still very viable even if the US government does not legalize marijuana at the federal level in the short term.
The firm said that absent changes at the federal level, “we would look for stocks that are mispriced relative to peers and have above-average EBITDA/share growth potential.” He added that Verano and MariMed met that criterion and classified both as overweight.
Zuanic noted that Verano already has operations in 13 states, including three states that recently legalized recreational use and others that could soon legalize it. He said he considered the discount to the stock’s valuation to be “unjustified,” given the company’s “superior” metrics, growth trends, depth in key markets and the “optionality” of states like Ohio, Pennsylvania and Florida legalizing the recreational use.
The firm added that the stock’s recent move to Cboe Canada from the CSE “should help increase liquidity and institutional ownership.”
MariMed, meanwhile, was considered on track to become a top 10 multistate operator, or MSO, by 2025 and was “well positioned to overtake the pack.”
“At a time when others are reducing their costs and capital expenditures, whether due to financial pressure or a lack of growth opportunities, MariMed is increasing capital expenditure and can afford to do so,” Zuanic wrote in a note.
He added that he believes the stock will appreciate if the company can “turn up and gain depth,” particularly in potentially strong growth markets.
Green Thumb Industries was labeled a “first among the largest MSOs,” with superior growth potential and an attractive valuation. He added that the company has the “strongest” balance sheet and “best” operating cash flow metrics of the largest MSOs.
Zuanic praised Green Thumb for continually being “a step ahead of the curve” by establishing operations in medical-use states that are about to begin recreational sales.
Even without federal reform, Green Thumb should “still have upside, thanks to its own growth,” Zuanic said, rating the stock as overweight.
Regarding Planet 13, Zuanic commented that the action has “franchise strength” through its “unique and scalable” superstore concept. He added that several growth initiatives, such as its merger deal with VidaCann, should lead to over 60% EBITDA and cumulative top-line growth by 2025.
“Where the company fails is in profitability, in part due to the initial nature of the business outside of Nevada and the lack of depth in parts of its footprint,” Zuanic wrote, noting that the company’s EBTDA margins were negative in the second quarter. 2023.
