With the market under pressure today I'm working on my shopping list for stocks that I want to hold into third-quarter earnings. At the top of my list is Trulieve Cannabis (TCNNF) .
TCNNF is a medical cannabis company that distributes its products through dispensaries in Florida, California, Massachusetts, and Connecticut. Yesterday it announced two acquisitions in Pennsylvania and will be operating in five states. It has 54 dispensaries in Florida.
TCNNF is a 'seed-to-sale' company that offers 155 products including smokable flower, flower pods for vaporizing, concentrates, topicals, capsules, tinctures, and vape cartridges. It recently opened a commercial kitchen and added 'edibles' to its Florida offerings.
For the first quarter of 2020, TCNNF surpassed consensus for revenues and profitability, achieving $96.1 million in revenue, representing a sequential quarter-over-quarter increase of 21%. Its adjusted EBITDA was $49.4 million or 51%, and it generated positive free cash flow, ending with cash and cash equivalents of approximately $101 million. The company is expected to earn $0.65 in 2020 and grow that 69% in 2021 to $1.10.
After the close on September 16, the company announced its expansion into Pennsylvania and announced an offering of 4.1 million shares at C$24.50 which is equivalent to around US$18.62.
Stifel raised its price target to C$47 (US$35.72) and noted that the company has the best free cash flow in the industry. Both Cantor and Needham also cover the company and have attractive target prices.
Technical support is now at the secondary offering price of around $18.62. We have added to our position and will be looking to build it further in front of the next earnings report.