iAnthus Stock Positioned to Profit Along With the Company

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iAnthus Capital Holdings stock could soon bring about a turnaround. A massive drop in the stock has taken it to the $2.50 per share range. However, expansion and rising revenues defined the last quarterly report.

On its current path, it holds enough cash to stay in business until it becomes profitable over the next year. While ITHUF remains risky, a turnaround from current levels could bring massive gains to investors.

The founders created iAnthus to bring together operations, capital markets, and M&A expertise across the marijuana industry. The firm has put this knowledge to use across the U.S. It operates 24 dispensaries in 11 U.S. states spread across the country. The New York-based company also owns cultivation and processing facilities. A takeover of BPX Bioceutical, which closed in February, and the purchase of CBD for Life in July helped to fuel that expansion.

ITHUF Stock Faces Losses, Rapid Growth

Like most marijuana stocks, ITHUF stock benefits from rapid growth. The company announced its second-quarter earnings in late August. There, it reported revenues rose 35% from the previous quarter to $25 million. The company also raised $50 million in added capital and expanded in Florida.

However, like most cannabis equities, it has not yet turned a profit. Losses came in at $9.3 million. Losses came in at $16.5 million in the previous quarter. Moreover, analysts expect the firm to turn profitable over the next few quarters.

To be sure, the sector has suffered. Most blame the drop on marijuana stocks on the oversupply of dried cannabis. Others cite the slow, uncertain pace in making marijuana legal across the U.S.

Whatever the reason, ITHUF stock has fallen along with its peers. iAnthus has lost 65% of its value since peaking in April. Due to this drop, many now wonder if they can consider this stock a buy. At its current stock price of around $2.50 per share, it now trades near levels it saw in 2016.

Should Investors Buy iAnthus Stock?

At current levels, ITHUF stock appears expensive, but not compared to other marijuana equities. It currently trades at around 12.4 times sales, a bargain compared to an equity such as Canopy Growth . Moreover, analysts expect iAnthus to earn a profit over the next year. This gives it a forward price-to-earnings (PE) ratio of 41.4. Many investors would pay that multiple given the 108.1% earnings growth forecasted for the fiscal year.

The low stock price, losses, and the negative sentiment in the marijuana industry make this speculative. Also, management made a statement in February that seemed concerning. iAnthus management explicitly told investors that the ability to maintain “normal operations” would depend on the ability to raise capital.

Upon hearing this, it becomes unclear whether management strives for brutal honesty or simply wants to cover itself legally. However, since they attracted the needed capital, “normal operations” should remain the norm. If it can turn profitable, I think ITHUF stock should begin to recover the value it lost over the spring and summer.

iAnthus Capital Holdings is a market awareness client of Capital 10X.

iAnthus Capital Holdings is a market awareness client of Capital 10X.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Will Healy
Will Healy is a freelance business and financial writer based in the Dallas area. In addition to marijuana, energy, and mining stocks, he has also written about real estate, insurance, personal finance, and macroeconomics. In addition to Capital 10X, his articles have appeared on sites such as InvestorPlace, Yahoo! Finance, MSN Money, Kiplinger’s Personal Finance, GOBankingRates, and Seeking Alpha. Will holds a B.S. in Journalism from Texas A&M University, an M.S. in Geography from the University of North Texas, and an MBA from the University of Texas at Dallas. Phone: 416-721-8257. Address: 682 Indian Road Toronto, Ontario M6P 2C9.

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