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When you look to invest in a nascent industry, you need to be aware of certain risks. Companies part of such industries have the potential to generate multi-fold returns. Alternatively, they can also burn massive investor wealth.
We have seen how investor enthusiasm was crushed during the dot-com bubble at the start of this millennium. Several tech companies filed for bankruptcy and were wiped out once the dust settled. However, fundamentally strong companies such as Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) have survived and thrived in the last two decades, thereby increasing investor wealth at an exponential rate.
The cannabis industry can be compared to the tech boom or the dot-com bubble. Currently, several pot stocks especially north of the border are grappling with a slew of structural issues. However, if you look closely you will also find some hidden gems such as Jushi Holdings (OTC: JUSHF).
Jushi Holdings- An overview
Jushi Holdings is a cannabis and hemp company. It engages in the cultivation, processing, and distribution of medical and adult-use marijuana products. The company is focused on building a portfolio of branded cannabis and hemp-derived assets in several jurisdictions including Pennsylvania, Ohio, Virginia, California, Nevada, and Illinois.
Earlier this month, Jushi Holdings opened its 17th retail cannabis store. Eleven of these stores are located in Pennsylvania which is one of the fastest-growing cannabis markets in the U.S. The cannabis player aims to open 10 to 12 new retail pot stores in 2021.
In the first quarter of 2021, Jushi expects to rake in $40 million in sales, indicating year-over-year growth of 365%. In fiscal 2021, it forecasts to generate between $205 million and $255 million in sales, up from just $80.6 million in 2020. Analysts tracking the firm expect it to report sales of $216.3 million in 2021.
Valuation and more
Jushi Holdings is valued at a market cap of $818 million which suggests its trading at a forward price to sales multiple of 3.78x which is quite reasonable considering its growth rates. While several marijuana companies are grappling with mounting losses, Jushi is poised to turn profitable by the end of this year.
Since July 2019, Jushi Holdings stock has already returned a staggering 300%, easily outpacing the broader markets. Marijuana legalization in the U.S. is expected to gain pace which means Jushi should touch record highs if cannabis is legalized at the federal level.
Right now, legal marijuana sales in the U.S. are forecast to grow at an annual rate of 21% between 2019 and 2025. In fact, the pot industry in the country might even cross $40 billion by the end of the forecast period.
Jushi Holdings is fast gaining traction in regions where it has established a strong presence. Further, it part of an expanding addressable market and the company’s widening profit margins make it a top stock to buy and hold right now.
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