Hold and Buy Cannabis stocks fell by some 70% in 2022, compared with the market’s 20% drop.
“Buy the dip,” says Cantor Fitzgerald analyst Pablo Zuanic in his January 2023 outlook piece on the weed industry. Cannabis producers in the U.S. and Canada are struggling with weak retail pricing, scarce capital, and persistent U.S. federal restrictions. But over an 18-to-24 month stretch, well-funded U.S. operators could consolidate weak rivals and gain institutional investors with a large-exchange listing.
Zuanic’s favorite stocks are the big American chains Curaleaf Holdings CURA –0.36% (ticker: CURLF) and Green Thumb Industries GTII +0.35% (GTBIF), followed by Cresco Labs CL –2.65% (CRLBF) and Trulieve Cannabis TRUL +0.71% (TCNNF). He liked them all the way through last year’s slide, of course. But now he notes that their ground-down stocks leave these growing companies valued at less than two times 2023 sales and eight times earnings before interest, taxes, depreciation and amortization, or Ebitda.
The analyst remains convinced that state-licensed cannabis companies will continue growing revenue as more states join the 21 that allow recreational sales. He even talks of the industry leaders eventually commanding multiples of 30-times their Ebitda.