Is Columbia Care Stock a buy it now?

The pandemic has proven beneficial for marijuana businesses, which have seen an increase in demand. The rise of state legalization further boosted sales. However, the lack of positive movement toward federal legalization is making investors skeptical now. But most cannabis companies have increased their revenue to become profitable even in this limited market. It doesn’t matter when legalization comes, but choosing and investing in the right growth stock in this evolving industry could lead to excellent profits in the future.

One of these domestic pot growers is based in New York Care British Columbia (OTC: CCHWF). With a market capitalization of just $1 billion, this small company is poised to put up an uphill battle against the biggest multi-state players. This remarkable growth stock has huge potential as the industry matures and is a great buy now.

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A large national presence

Although a small cap company, Columbia Care has adapted a smart strategy of targeting limited license markets. State regulators in cannabis markets like Massachusetts, Ohio, Pennsylvania, and Illinois limit the number of licenses they issue to cannabis operators.

This strategy of targeting the limited licensing market helped Columbia Care establish a loyal customer base for its products. It’s no surprise that its revenue grew 144% year-over-year to $132 million in the third quarter of 2021. The company also saw a drastic 634% increase in its adjusted earnings before interest, taxes, depreciation and amortization. (EBITDA) to $31 million from the prior year period. It’s not profitable yet.

The company said the state markets of California, Colorado, Massachusetts, Ohio and Pennsylvania were the top revenue contributors. Columbia Care also saw a 241% year-over-year sales increase in the Florida market.

Note that Florida only allows medical cannabis. This kind of solid revenue-generating customer base will come in handy for the company when the state legalizes recreational marijuana. Developments are underway in the state.

Illinois is also another important market for the company, generating a 159% year-over-year sales increase. Illinois legalized recreational marijuana in January 2020, and sales have skyrocketed since then. The state generated about $1.3 billion in recreational sales last year.

The company also extends its roots to Colorado and the Mid-Atlantic through intelligent acquisitions. Recently, it completed the takeover of Green Leaf Medical and the acquisition of Colorado-based Medicine Man.

Columbia Care operates 131 locations, 99 of which are retail stores. Meanwhile, Trulieve Cannabis operates 159 stores, Green Thumb Industries has a total of 73 stores, and Curaleaf has 125 dispensaries nationwide.

Closer to profitability

Many new states legalized marijuana last year. However, setting up new regulated markets and opening new stores takes time. Columbia Care management expects these headwinds to affect full-year results. The company now expects revenue of between $470 million and $485 million, adjusted EBITDA of between $85 million and $95 million and an adjusted gross profit margin of approximately 46% for the full year.

Once these challenges are resolved, the company will find it easier to gain a foothold and increase revenue in new markets. During this time, all of his acquisitions will also begin to show their full potential. Steadily growing revenue will also bring the business closer to generating profits.

We’ll know more about how the company expects 2022 to go when it releases its fourth quarter results, which are expected to be released by March 3.

Most US cannabis stocks have always performed well. But it’s amazing to see this small company catching up with the bigger players. Although Columbia Care may take some time to reach Trulieve and Curaleaf (touching $1 billion in revenue for the year), the company is on the right track.

Analysts expect Columbia shares to rise 213% over the next 12 months. As more states legalize marijuana this year, Columbia Care will have more opportunities to grow.

Currently, the stock is trading below its 52-week high, making it a good time to buy on the downside. That said, marijuana is an evolving industry and comes with some risk, so starting with a small investment with a diversified portfolio would be a smart option for risk-averse investors.

This is the marijuana stock you’ve been waiting for
A little-known Canadian company has just unlocked what some experts believe is the key to profiting from the coming marijuana boom.

And make no mistake, it’s coming.

Cannabis legalization is sweeping North America – 15 states plus Washington, DC, have all legalized recreational marijuana in the past few years, and full legalization came to Canada in October 2018.

And an under-the-radar Canadian company is about to explode because of this upcoming marijuana revolution.

Because a game-changing deal has just been struck between the Ontario government and this mighty company…and you need to hear this story today if you’ve even considered investing in pot stocks. .

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Learn more

sushree mohanty has no position in the stocks mentioned. The Motley Fool owns and recommends Green Thumb Industries and Trulieve Cannabis Corp. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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