As 2024 looms on the horizon, the cannabis sector stands at the cusp of an exciting era. This likely surge is fueled by a blend of political backing and a shift in public opinion. A major recent development for the industry is the U.S. Department of Health and Human Services’ recommendation to reclassify marijuana as a Schedule III controlled substance, an initiative supported by six governors. This change is in line with the growing public endorsement, particularly evident in states like Ohio and Florida, adding to the allure of wagering on cannabis stocks for 2024.
The decriminalization and normalization of cannabis mirrors public sentiment while promising massive financial advantages. Given these progressive changes, the cannabis industry’s growth trajectory in 2024 seems remarkably well-supported. With this backdrop, let’s explore seven cannabis stocks for 2024 that are ripe for long-term investment.
Curaleaf Holdings (CURLF)
Curaleaf Holdings (OTCMKTS:CURLF) is an enticing pick at current prices and in the current backdrop in the marijuana realm. Moreover, its third quarter results have showcased robust financial health, reporting operating and free cash flow of $47 million and $33 million, respectively. Moreover, its outlook remains optimistic, forecasting a dynamic finish to the year and a promising start to 2024. Such projections hint at an encouraging surge in sales and EBITDA, fueling an upward trajectory in stock performance.
Furthermore, Curaleaf’s investment in research and development isn’t just a financial maneuver; it’s a major step towards tapping the lucrative medicinal cannabis market in Europe. This segment remains ripe with opportunities and remains a major value driver for the company. What’s more, Curaleaf’s current trading position is compelling, standing at just 2.3 times forward sales estimates. Coupled with a 38% uptick over a six-month period, the company’s stock presents an appealing proposition for those eyeing potential in the cannabis sector.
Green Thumb Industries (GTBIF)
Green Thumb Industries (OTCMKTS:GTBIF) stands out in the cannabis sector as a pure-play delivering consistent cash flow. Achieving profitability in the cannabis sphere is no small feat, and Green Thumb’s robust financial health effectively positions it for industry dominance with its A-graded profitability profile.
In its most recent financial quarter, Green Thumb’s performance exceeded market expectations again. The company posted a third-quarter earnings per share (EPS) of five cents, beating forecasts by a penny. Its revenue climbed to $275.4 million, marking a 5.4% year-over-year increase and exceeding expectations by $18.1 million. The adjusted EBITDA stood at $83 million, roughly 30% of its sales, highlighting its operational efficiency. Also, its cash flow from operations, amounted to $154 million. Adding to its allure, Green Thumb is currently rated as a Strong Buy, showcasing a substantial 41.4% upside potential from its current price levels. This rating not only reflects the company’s strong financials but also signals its promising future in the increasingly competitive cannabis market.
Innovative Industrial Properties (IIPR)
Innovative Industrial Properties (NYSE:IIPR) is a specialized real-estate-investment-trust (REIT) focusing on the cannabis sphere, presenting a distinctive investment proposition. IIPR stands out with a consistent track record of collecting over 97% of its due rents. Additionally, the company’s anticipated debt restructuring could enhance its financial flexibility, paving the way for strategic acquisitions and reductions in liabilities.
Trading at just 9.8 times forward funds from operations (FFO), the company’s financial performance is noteworthy. Its third-quarter FFO of $2.09 exceeded expectations by four cents, and it reported a year-over-year improvement in sales of 9.8% to $77.8 million, surpassing forecasts by $1.26 million. These robust financials underscore its stability and potential.
Moreover, the stock’s attractive forward dividend yield of over 8% and a five-year dividend growth rate of 45.6% signal robust and growing income prospects. In the context of the rapidly expanding marijuana market, the REIT’s strategic focus renders it an enticing long-term investment.
Valley National Bancorp (VLY)
Valley National Bancorp (NASDAQ:VLY) presents a unique opportunity as an attractively priced bank stock, trading at 8.60 times GAAP earnings, while offering a healthy 4.4% total yield. What sets VLY apart, however, is its rather unconventional foray into the cannabis sector, making it a compelling pick for bullish investors.
Navigating the financial challenges in the cannabis sphere, due to the federal-level roadblocks has been a daunting task for cannabis companies. Traditional banking institutions have often shied away from offering financial services to such businesses, given the legal complexities. However, Valley National has effectively embraced cannabis banking and established a dedicated division tailored to meet the diverse financial needs of cannabis-related businesses. This foresight positions Valley National as a strategic investment choice, blending traditional banking stability with innovative growth potential in the burgeoning cannabis market.
Verano Holding (VRNOF)
Verano Holding (OTCMKTS:VRNOF), a relative newcomer founded in 2021, has been riding the momentum of a major tailwind. The potential for adult cannabis legalization in Florida, where it boasts a strong foothold, adds to Verano’s allure, as analysts predict the state’s marijuana sector could triple following legalization, expected in 2024.
However, investing in Verano requires a long-term perspective. The legalization initiative in the state must first overcome legal hurdles, though, and won’t be up for a vote until the following November. Despite this wait, Verano’s stock price presents an attractive opportunity for investors who can stomach the volatility. With 67% of Floridians supporting cannabis legalization, Verano is well-positioned to capitalize on this shifting landscape. Legalization in Florida could dramatically expand Verano’s market reach, boost top-line results streams, and strengthen its position in one of the U.S.’s key cannabis markets.
Leafly Holdings (LFLY)
Leafly Holdings (NASDAQ:LFLY) is a dominant force in the cannabis sector, connecting cannabis enthusiasts with retailers and top licensed brands. Renowned as a comprehensive hub for everything cannabis-related, Leafly stands out in its niche. In its recent financial report for the third quarter, Leafly reported revenues of $10.6 million. Despite a slight dip from the previous year, the company demonstrated financial prudence by slashing operating expenses by 33% to $10.9 million.
Leafly’s stability is evident, maintaining $14.5 million in cash, and its influence in the industry is as seen with the recognition of Permanent Marker as the 2023 Strain of the Year. This Indica-dominant hybrid has soared in popularity, expanding from 10 to 587 stores within a year. The strain’s success is a testament to Leafly’s market influence, shaping consumer trends. Additionally, its expanded partnership with GetGreenline ULC in Canada enhances operational efficiency for cannabis operators, integrating pickup and delivery orders with Greenline’s POS system for streamlined retail operations.
OrganiGram Holdings (OGI)
OrganiGram Holdings (NASDAQ:OGI) is a key figure in Toronto’s cannabis landscape. The company’s trajectory in the recreational cannabis market has been impressive, marked by an encouraging top-line growth, propelled by robust hashish sales and a revival in flower sales.
Moreover, OrganiGram has expanded its portfolio with the launch of THCV products, leveraging whole flowers through popular brands, including SHRED and Trailblazer. This step, along with securing exclusive rights in Canada to Phylos’ high THCV cultivars, underscores their commitment to offering unique user experiences.
Furthermore, the company is strategically converting its grow rooms to use custom-designed F1 hybrid seeds to achieve low-cost production while focusing on terpene-rich, high-potency cultivars. Encouragingly, the company has also seen a rise in international revenue, which adds another layer to its bull case at this time.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
