Verano’s Cannabis Cash Flow Tops the Charts — Time to Buy?

Date:

Today’s What’s New in the Marijuana Market:

  • I will cover the cannabis strains that have a lot of potential in 2022.
  • Answer viewers’ questions about the stocks covered in December.

Let’s start with the company we found during the winter vacation.

Verano’s impressive cash flow

During the holidays, I caught up with a research report covering all market sectors. The report on cannabis was intriguing to me.

I read in 2021 what covered the cash flow of some cannabis operators in the third quarter, and one company stood out: Verano Holdings Corp. (OTC: VRNOF)...

Based in Chicago, the company is a US multinational cannabis operator with consumer brands such as Encore, MUV and Verano.

Operates in 14 states: Illinois, Florida, Arizona, New Jersey, Pennsylvania, Ohio, Maryland, Massachusetts, Nevada, Michigan, Arkansas, California, Missouri, and West Virginia. I have a license.

While the cash flow of many cannabis companies declined quarterly, 54% of the 28 reported companies showed positive operating cash flow in the third quarter of 2021. That operation.

If operating cash flow is negative, the company must rely on banks to raise funds for capital expansion. And we know how difficult it is in the field of cannabis.

Verano reported third-quarter revenue growth of 221% year-over-year. More importantly, the cash flow margin from operating activities was 58%, 4,161 basis points higher than in the previous quarter.

It also paved the way for cash from operating activities (the amount of money that came from ongoing regular business activities) with a 32% margin (an increase of 1,723 basis points quarterly).

Overall, Verano led operating cash flows, cash from operating activities, interest, taxes, depreciation and adjusted earnings before amortization (EBITDA) for all 28 companies. In addition, Verano is in the top three in both adjusted EBITDA and cash from operating activities in the previous quarter, demonstrating sustainable performance.

Number of COVID boost VRNOFs

Verano’s business is paying off in terms of total annual revenue.

In 2018, total annual revenue was only about $ 31.1 million. In 2019, it more than doubled to $ 66 million.

COVID-19 was generous to Verano in 2020 and 2021. Revenues jumped to $ 228.5 million and then $ 763.9 million, respectively.

Growth is not over yet, according to expectations.

By 2023, Verano is estimated to generate more than $ 1.5 billion in total annual revenue. This is a 101.7% increase from the record 2021 figure.

Verano’s EBITDA is also expected to grow strongly.

Verano’s EBITDA was only $ 10.9 million in 2018, but fell to $ 8.8 million the following year.

However, in 2020 and 2021, Verano has grown tremendously as EBITDA surged to $ 218.7 million in 2020 and $ 362.9 million in 2021.

It is estimated that the company’s adjusted EBITDA will be $ 684.6 million by 2023, an increase of 88.6% compared to 2021.

Gross revenue and EBITDA margins are expected to be lower than in 2020, but still in a very healthy range.

All of this is Verano’s management, especially Its new CFO Brett Summerer, Doing a great job of managing company money.

Summerer has been in the position of Financial Planning and Analysis, Comptroller and CFO at General Motors for 10 years. He was also responsible for Corning’s finances and analytics and was the CFO of Kraft Heinz’s US operations.

In addition, the company has just completed the acquisition of Caring Nature LLC and Connecticut Pharmaceutical Solutions Inc., building a solid foothold in Connecticut, which legalized adult cannabis in July 2021.

VRNOF is on the rise

This financial stability is starting to raise VRNOF.

Stock prices have fallen 60% from their 52-week highs in February 2021, but have been on the rise since late December.

The 50-day moving average is set to exceed the 100-day moving average, setting a “golden cross” to show further strength to that momentum.

VRNOF takeout

I like where Verano is heading. The rest of the cannabis market is flat or down slightly, but it shows good uptrend.

All seven analysts covering Verano (8 of me) have purchased or rated Verano as outperform.

It has strong finances and its expansion seems to be expanding according to market conditions rather than an empty pie.

This recent upward trend in stock prices is a good buy opportunity as we want to “buy high and sell high”. VRNOF was able to find support for $ 10 and see resistance points for $ 14, but I think it could be even higher.

Now let’s move on to the reader’s question.

Viewer reaction

Frank sent me an email Feedback@MoneyandMarkets.com Listen, ask:

I am Columbia Care (OTC: CCHWF) Stocks. Where is the stock for the next 12 months? Thank you, Frank.

Thank you for your question, Frank.

In the December 2nd update, we talked about the volatility of the cannabis market that has been seen since 2020.

However, in the third quarter of last year, 10 of the 11 cannabis stoners saw a positive quarterly change in revenue. Marijuana Business Daily..

Columbia Care has made the biggest positive change. Quarterly sales were $ 132.3 million, an increase of 21% from the previous quarter and an increase of 144% from the previous year.

However, the company reported a quarterly loss of $ 37.2 million. This is part of the reason why CCHWF is more than 60% off the 52-week high.

CCHWF was rough in 2021

Columbia Care Stock Chart 2021 Cannabis Company

As I said That video, I like Colombian care. There are 99 clinics and 31 cultivation and manufacturing facilities. Reporting a 21% quarterly and 144% year-over-year increase in earnings, the stock should be popular with investors.

Institutional investors see Columbia Care’s quarterly loss of $ 37 million, not the fact that CCHWF is leaving a mark in Germany, one of the largest markets in the European Union set to legalize cannabis. There may be.

Columbia Care is already in both Germany and the United Kingdom — including a joint venture with Germany-based Moeller Pharma GmbH to sell products infused with cannabinoids.

Take away

With some strong upward momentum, I think Colombia Care will offer great buying opportunities for investors looking to take advantage of the cannabis expansion in Europe.

However, the price of Columbia Care can be below $ 3 per share until something serious happens in the United States.

I hope it answers your question.We’re going to connect you with some to send it Money & Market Gear as a way to say “thank you”.

Money & Markets Hat

You can also get Money & Market Send me a question to Adam O’Dell or Charles Sizemore and use it in one of the videos.Please send Your questions and feedback..

Where to find us

This week I’ll go into more detail Bull & Bear It’s a podcast, so stay tuned.

Subscribe to youtube

And check us out Ask Adam anything In the video series, Chief Investment Strategist Adam Odel and ours Investing with Charles In the series, we will discuss the trends I wrote with expert Charles Sizemore.

Also you can follow me Twitter (@InvestWithMattC), Offers more insights into the cannabis market as well.

Safe transaction,

Clark_Sig

Matt Clark, CMSA®
Survey analyst, Money & Market

Matt Clark is a research analyst Money & Market.. He is a Certified Capital Markets & Securities Analyst at the Corporate Finance Institute and Seeking alpha..Before joining Money & Market, He has been a journalist and editor for 25 years, responsible for college sports, business and politics.

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