Two things have happened recently that have investors thinking more seriously about which weed stocks to buy.
First, Uber eats (NYSE:UBER) and cannabis information platform operator leafy (NASDAQ:LFLY) announced that they had started teaming up on cannabis delivery in toronto, the largest city in Canada. If the Toronto experiment goes well, they could roll out cannabis delivery to other cities in Ontario. Leafly currently works with approximately 200 cannabis retailers in the Toronto area.
The second announcement suggesting cannabis is here to stay was the news Green Thumb Industries (OTC:GTBIF) Is partners with Circle K, one of the largest convenience store chains in the world. Green Thumb will sell medical marijuana in leased space at 10 Circle K gas stations in Florida. Only Floridians with medical marijuana cards — about 700,000 across the state — will be able to buy weed from Circle K, but the deal is another sign that the country is ready for marijuana to go mainstream.
Here are three weed stocks to buy to ride this age-old trend.
Cannabis Trulieve (TCNNF)
While Green Thumb landed a potentially lucrative retail deal in Florida, Trulieve Cannabis (OTC:TCNNF) has the largest medical marijuana market share in the state. Truly a 120 medical marijuana dispensaries in Florida, more than double the next competitor. It also operates in 11 states.
Beginning of October, Tag titles analyst Russell Stanley reiterated his “buy” rating on the stock. It estimates that Trulieve will earn C$419 million in earnings before interest, tax, depreciation and amortization (EBITDA) on revenue of C$1.26 billion.
Stanley points out that Georgia is becoming a major revenue and profit generator for the company. He also notes that Trullieve is expanding in Arizona and West Virginia, where it has 20 dispensaries and eight dispensaries, respectively. And with around C$190 million in cash on its balance sheet, Stanley says the company has plenty of cash to make an acquisition or two.
TCNNF the stock is trading at 1.6x estimated 2023 sales. Aggressive investors should put Trulieve at the top of their list of weed stocks to buy.
Food Couche-Tard (ANCTF)
Food Couche-Tard (OTCMKTS:ANCTF) is a convenience store operator with a retail network of more than 7,000 stores across North America, including Circle K. It offers investors a more conservative way to play the aforementioned Circle K deal than to buy shares of Green Thumb.
The The green thumb agreement is not the only one from Alimentation Couche-Tard marijuana game. In September, the company announced that it had partnered with flower of fire (OTC:FFLWF) to open a Spark Perks cannabis store next to a Circle K location in Brampton, Ontario. It is the first of 10 co-located stores the companies plan to open together over the next year and follows the opening of two pilot stores in Alberta in July 2020.
Lying-Tard owns more than 35% of Fire & Flower, a Toronto-based cannabis retailer and technology company that operates 92 cannabis stores across Canada. He started investing in the company in 2019 and seems serious about the deployment of cannabis sales in co-branded locations in Canada, the United States and elsewhere.
Over the past 10 years, Couche-Tard has grown its revenues at a compound annual rate of 11% and its EBITDA at a CAGR of approximately 20%.
Tilray (NASDAQ:TLRY) is the leading cannabis company in Canada with a 8.5% market share. The company announced mixed quarterly results in early October for its first fiscal quarter. The net income was essentially stable compared to the previous year taking into account currency fluctuations. However, it posted positive adjusted EBITDA for the 14th consecutive quarter.
Tilray expands its overseas cannabis and has an excellent group of non-cannabis assets held in the United States, including SweetWater Brewing, Breckenridge Distillery and Manitoba Harvest. The company recently in partnership with Anheuser Busch (NYSE:BUD) Breckenridge Brewery to produce barrel-aged beer and beer-aged whiskey under the Buddy Pass brand. It is now available across the United States via Southern Glazer Wines and Spiritsone of the largest liquor distributors in the United States. Tilray’s alcoholic beverages business accounts for 13% of its overall revenue, up 400 basis points from a year ago.
Tilray has more than enough to keep him busy until the US federal government legalizes cannabis. Plus, with nearly $500 million in cash, expect to see more acquisitions.
As of the date of publication, Will Ashworth had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.