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Curaleaf Is Firing On All Cylinders: Blockbuster Earnings, Largest USA Cannabis Company


  • CURLF reported 205% revenue growth in its latest quarter.
  • The company has fortified its balance sheet with a $240 million cash infusion from recent equity offerings.
  • CURLF has entered Europe with its most recent acquisition.
  • I rate shares a strong buy with 100% potential upside over the next 12 months.
  • Looking for a portfolio of ideas like this one? Members of Best Of Breed get exclusive access to our model portfolio. Learn More »

Curaleaf (OTCPK:CURLF) reported earnings after the bell on Tuesday, delivering typically strong results. Due to the federal criminality of cannabis as a controlled substance, many investors might not be familiar with cannabis investment plays based in the United States. Unlike Canadian operators like Canopy Growth (CGC), in which investors are merely hoping for an eventual presence in the United States, there are operators like CURLF which already own medical dispensaries or even retail dispensaries in states which have already legalized adult use.

While CURLF might not have the same margin profile as peers, investors may be attracted to its large footprint, which gives it exposure to potential upside from future adult-use legalization efforts. I rate shares a strong buy with 100% potential upside.

The Largest Cannabis Company In America

As of the present day, CURLF has the largest cannabis footprint in the country, with a presence in 23 states:

(Investor Presentation)

In most of its markets, CURLF is a vertically integrated operator, meaning that it cultivates and processes its cannabis and finally sells the product in its own dispensaries:

(Investor Presentation)

CURLF also is a leading wholesaler of cannabis in virtually all its markets:

(Investor Presentation)

As we can see below, CURLF has a major presence in many states which have either already legalized adult-use or are anticipated to legalize adult use.

(Investor Presentation)

CURLF reported results on Tuesday which were quite strong. Revenue grew 26% sequentially and 205% year over year to $230.3 million. Growth has been primarily driven by acquisition activity. Gross margin of 48% was slightly lower than 50% last quarter, but was significantly higher than 38% in the prior year. It’s worth noting that Green Thumb (OTCQX:GTBIF), a company I have highlighted to subscribers as my top pick in the sector, had gross margins

High Conviction Idea: Cannabis Stocks In 2021

CURLF is firing on all cylinders, but is not my top pick in the cannabis sector.

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This article was written by

Julian Lin profile picture

Julian Lin is a financial analyst. He finds undervalued companies with secular growth that appreciate over time. His approach is to look for companies with strong balance sheets and management teams in sectors with long growth runways.

Julian is the leader of the investing group Best Of Breed Growth Stocks where he only shares positions in stocks which have a large probability of delivering large alpha relative to the S&P 500. He also combines growth-oriented principles with strict valuation hurdles to add an additional layer to the conventional margin of safety. Features include: exclusive access to Julian's highest conviction picks, full stock research reports, real-time trade alerts, macro market analysis, individual industry reports, a filtered watchlist, and community chat with access to Julian 24/7. Learn more.

Analyst’s Disclosure: I am/we are long GTBIF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (77)

paw7800 profile picture
Curaleaf is catching up to Surterra/Parallel/Ceraf in Florida for 2nd. I like the new acquisition and one has to wonder about Mexico next, maybe a Curaleaf in La Playa.
12 Mar. 2021
Proce-to-Sales of Curaleaf 17.2, Green Thumb 15.9, Truleave 13.4, Cresco 8.4.
So as I See it, there should better be good reason for Curaleaf and Green Thumb to be around 2x as expensive as Cresco based on current sales. All are growing like hell! But I think Cresco is the best value though.
Investor1546 profile picture
@ivo82 I agree with this 100%. I actually think Cresco potentially deserves a premium due to their focus on wholesale. Cresco Labs will explode.
@ivo82 agree, $CRLBF looks like the best value among the bigs, though $CCHWF looks juicy, too...
Julian Lin profile picture
@ivo82 Cresco is definitely the cheapest at the moment, but I think the premium is deserved on some of those names.
Sounds as if NY is moving quickly to legalize. Check the Coumo news today. Curaleaf appears in the #1 spot in NY
Julian Lin profile picture
@Bestpaboxer The dominos are falling...
33larrybirds profile picture
what was your entry point ? Its 15.60 today - where is a good place to enter?
Julian Lin profile picture
@33larrybirds I initially bought at $7, but I've since sold and reallocated to other cannabis holdings
headnugg profile picture
@33larrybirds When it's worth $100 it won't matter if you get it under $10 or at $16
Great article - very informative and positive confirmation a few of my favorite cannabis investments! Thanks.
Julian Lin profile picture
@Notlim Shot Thank you for stopping by!
Let's not forget Outstanding Shares as well...
Julian Lin profile picture
@Halo Hat They'll keep going up, probably, as they continue making acquisitions
Lance Brofman profile picture
Once the 13 existing New Jersey medical marijuana dispensaries show they can adequately supply both the state's 97,000 patients and an adult use market, they can begin legal recreational marijuana sales. This does not worry the criminals and prohibitionists much, because there is now a shortage of cannabis in New Jersey. However, CURLF is building a new 111,000 square foot facility which will triple its capacity, when it comes online in Q1 2021. A rough estimate is that a well-run operation can produce 50 grams per square foot, with six grows a year. With the new facility, total CURLF square footage in New Jersey will total 153,150. CURLF is also planning a 500,000 square foot outdoor cultivation and two new retail outlets in New Jersey.

CURLF has one dispensary now in New Jersey that is the largest on the east coast. A second one will open in New Jersey soon. A more important factor is that edibles are the fastest-growing segment of the cannabis market. The terminology is not uniform in the industry, where some break the market down between flower and everything that is not inhaled, others break down the non-inhaled market into edibles and concentrates. Regulation for medical cannabis is very confusing, with some states only allowing smokable flower and no edibles, while other jurisdictions allow no flower and only non-inhaled.
The reason that edibles are the fastest-growing segment is not that the wealthier, typically older, cannabis consumers are fond of bad tasting gummies and cookies, but rather they would prefer to not smoke anything, and also want to know exactly how much they are consuming. Edibles provide the effects of flower without the smoke and smell.

The current New Jersey Medical marijuana market is regulated by a division of the Department of Health. This will eventually be replaced by a new cannabis regulatory commission. Currently the New Jersey Medical marijuana market regulations do not permit edibles per se. However, even the most ignorant regulator is dimly aware that forcing medical patients to smoke their "medicine" is not ideal. Thus, the CURLF dispensary in New Jersey can sell lozenges and tinctures. These are not called edibles in New Jersey, rather they are categorized as "concentrates." In states such as Colorado, lozenges and tinctures are sold in the "edibles" category.

Some of the smaller New Jersey Medical marijuana dispensaries that compete with CURLF only sell flower. Others do sell lozenges and tinctures, which they categorize as "ingestible." However, these are all CURLF brand lozenges and tinctures. That includes the new Ascend dispensary in Montclair, New Jersey. Thus, CURLF has for now, a complete lock on the New Jersey non-flower cannabis market, which consumers increasingly prefer.

A key factor is that because of Federal law, no cannabis products can be shipped interstate or imported. That means that all state-legal cannabis products must be completely produced only within the state where they are sold. That is why the relatively large multi-state cannabis operators such as Ascend, Columbia Care (OTCQX:CCHWF), Acreage Holdings (OTCQX:ACRGF), Green Thumb Industries (OTCQX:GTBIF), Verano Holdings, TerrAscend (OTCQX:TRSSF) and iAnthus (OTCPK:ITHUF) now have to buy any lozenges and tinctures they sell in New Jersey, from CURLF. Furthermore, for the first half of 2021, CURLF will be the first and may be the only seller able to produce enough product to satisfy its medical customers and still have some to sell into the recreational market. It will certainly be selling all it can produce with its expanded capacity, either at its retail locations or in the New Jersey wholesale market to other dispensaries, which do not yet have production facilities located in New Jersey large enough to meet both medical and adult demand..."

Clairvoyant Investor profile picture
Profitability and a low float are just two of the characteristics that a successful stock on Wall Street needs to yearn/aspire for. One billionaire and several millionaires who work for curaleaf know what they are doing. I really like Curaleaf and hope that they Excel and do well now and moving forward into the future. The untenable dilution that this company is executing upon itself is irresponsible and indelible in the most negative light. Paying for the new acquisition with 85% of the purchase being paid for in shares is pouring salt in the wound for investors. Cannabis companies that focus on one state at a time with a dominant footprint and branding presence will fare much better. Untenable dilution and inorganic growth come with serious consequences over time
Julian Lin profile picture
@Dont Tread on Me If I'm not mistaken, the European acquisition will be accretive even accounting for stock financing.

Stock dilution is good when it is done on an accretive basis.
Q3 Proforma Rev to Q4 Managed Rev - 8% growth. We'll see what the others do, but Curaleafs reign as the biggest is likely coming to an end. Still keeping a position here, though it is quite small relative to GTI/Cresco
I think we could see Cresco or GTI catch them in Q2 at this trajectory
@Smid Cap Value I know Cresco had a blow out q last time, but I’d put my money on GTI hitting or surpassing Cura this q. What’s crazy too is they have about half the retail locations open as Cura.
Julian Lin profile picture
@Smid Cap Value Which is a good thing, I'm not sure shooting to be the largest is the best strategy
Green Thumb, Curaleaf, and Trulieve. Do you really need anything else?
Julian Lin profile picture
@Weedmania You could do a whole lot worse than that.
Investor1546 profile picture
@Julian Lin yes you definitely need Cresco Labs. It is trading at a significant unwarranted discount and has the the biggest focus on wholesale. CL is a winner, and even more of a winner at this discount.
Julian Lin profile picture
@mgerak I do own some of CRLBF - it's quite cheap
cesaronofri profile picture
Good Article Lin Thanks Can you comment anything about Planet 13 ?
Julian Lin profile picture
@cesaronofri Interesting concept, but much too small for my taste.
I'm pretty clear that you "rate shares a strong buy with 100% potential upside over the next 12 months." lol
it's not the number of states a company is in, but the number of people the company serves that matters.
@Halo Hat and the license structure of a given state that effectively regulates competition, at least in the short/mid term.
@Halo Hat People will cross state lines.
Not knocking the article, Curaleaf will be a winner with all the catalysts on the horizon, but rating it a strong buy with 100% upside and yet you don’t have any skin in the game?? Long $AYRWF $TRSSF $CCHWF $GRAMF $FFNTF
Julian Lin profile picture
@TheLastSKInvestor Good question...
I do think CURLF should do great, but I much prefer other players in the space ( I referenced Green Thumb in the report).
With CURLF there is admittedly some empire-building going on.
@Julian Lin Green Thumb is number 1 in my book.
BiotechValley Insights profile picture
Excellent analysis!
Julian Lin profile picture
@BiotechValley Insights Thank you for reading and commenting!
Where did you find the 660M outstanding shares? It's 588,790,581 shares on Fintel: https://fintel.io/so/us/curlf ... unless Fintel didn't include non-voting shares? I couldn't find any "SEC" filing with the outstanding shares number. Thanks.
Julian Lin profile picture
It came from their earnings release

It'll probably be much higher in 12 months anyways
thanks for a good article. in trulieve, curaleaf and MSOS and strong returns
Julian Lin profile picture
@Bestpaboxer Thanks for reading and commenting
This site has been very down on Curaleaf and pumping up Cresco for past couple months. Still own bunch of Curaleaf but shifted some to Cresco off SA
Julian Lin profile picture
@Rayray52 That's interesting. Neither would be my top 2 picks in the sector, but I think both are at least decent
@Julian Lin So please confirm your top 2 picks ?
Julian Lin profile picture
@Siswati You could get the top 2 picks and much more if you click on this infomercial and take a 2-week free trial

09 Mar. 2021
Great article that also point out the risks associated.
Julian Lin profile picture
@ungz Thank you for reading and commenting!
I like it, however I like Cresco and GTBIF a tad more. Long on the US MSO's, MONEY TO BE MADE.
Julian Lin profile picture
@specA I do like GTBIF more as well
Investor1546 profile picture
@Julian Lin why don’t you like Cresco Labs as much?
Julian Lin profile picture
@mgerak I do like CRLBF, but not as much as GTBIF
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