Investors Should Acquire Cresco Stock On Acquisitions

planet-13-building-production-facility-plth

Cresco Labs [stock_market_widget type="inline" template="generic" color="default" assets="CL.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="CRLBF" markup="(OTC: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] just announced they will acquire Tryke Companies. This marks the latest in a series of acquisitions that continues to boost the profile of the Chicago-based medical cannabis company.

This also comes as Cresco and Origin House [stock_market_widget type="inline" template="generic" color="default" assets="OH.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="ORHOF" markup="(OTC: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] announced “substantial compliance” on the Second Request for additional information by the U.S. Department of Justice (DOJ) Antitrust Division. With the growth these acquisitions promise to bring, Cresco continues to make itself increasingly worthy of investor attention.

Tryke, Origin House Takeovers Moving Forward

Buying Tryke Companies will cost Cresco $282.5 million. However, it also includes six Reef Dispensary locations in both Nevada and Arizona along with real estate assets valued at $30 million. The deal also adds cultivation and processing facilities in both Phoenix and Las Vegas. Additionally, this will also give Cresco a segue into the Utah market.

This comes on the heels of the pending acquisition of Origin House. With the “Second Request,” Cresco can close on Origin House either on or around Oct. 17, 2019, which will bring the company’s brands to California.

Growth Not Fully Priced Into CRLBF Stock

Like most marijuana stocks, CRLBF stock posts losses this year. However, analysts forecast earnings of 32 cents per share in fiscal 2020. This takes its forward price-to-earnings (P/E) ratio to just under 23, a bargain compared to most better-known cannabis equities. Wall Street also predicts revenue growth of 299.4% this year and 307.1% in 2020.

Since December, the performance of CRLBF stock has largely mirrored the industry. Trading as low as $4.19 per share in December, it rose to $14.39 in April before falling back. Still, while the current $7.30 per share level represents a loss of almost half of its value, CRLBF stock may have established a floor at current levels.

Our own Evan Veryard interviewed Joe Caltabiano, the President and Co-Founder of Cresco. In the interview, Caltabiano outlined the goal to create a truly national brand that will be on “every shelf” where medical cannabis is legal. This focus should help boost the growth of CRLBF stock as the company turns to profitability.

The Bottom Line

The outlook continues to improve for CRLBF stock. With the company in “substantial compliance” on the Second Request, it appears that Cresco has cleared the antitrust obstacles necessary for it to finally acquire Origin House. Completing this acquisition removes a great deal of uncertainty for the company.

Moreover, the purchase of Tryke gives Cresco a larger presence in Arizona and Nevada, consistent with the goal Caltabiano outlined of deepening its presence in current markets.

Admittedly, a slower-than-expected pace for legalization in the U.S. has frustrated many investors. Still, the silver lining for traders is that they have an opportunity to pick up a growth name in the marijuana industry without the elevated valuations of a Canopy Growth [stock_market_widget type="inline" template="generic" color="default" assets="WEED.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="CGC" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"]  or an Aurora Cannabis [stock_market_widget type="inline" template="generic" color="default" assets="ACB.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="ACB" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"]

As the American marijuana industry continues to grow, I see only higher prices for CRLBF stock moving forward.

 

0 0 votes
Article Rating

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 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.
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments