Investors who believed in the potential of U.S. cannabis operator TerrAscend TRSSF TER some five years ago are now enjoying their solid gains.
TerrAscend has vertically integrated operations in Pennsylvania, New Jersey, Michigan and California, in addition to licensed cultivation and processing activities in Maryland and licensed production in Canada. The company runs an award-winning chain of dispensary locations, known as The Apothecarium, as well as Gage and Cookies retail stores.
TerrAscend's most recent moves include its acquisition of KISA Enterprises MI, LLC ("Pinnacle"), a dispensary chain operator in Michigan, and related real estate assets from KISA Holdings, LLC, for total consideration of $28.5 million. The purchase is immediately accretive to TerrAscend on both a sales and EBITDA basis. The news of the acquisition came on the heels of TerrAscend’s launch of the first-ever cannabis concentrates in New Jersey.
Over the last five years, TerrAscend’s stock has outperformed some of the most popular stocks in the world, such as Amazon AMZN, Netflix NFLX, Meta Platforms Inc META (previously Facebook), and Alphabet GOOGL.
In its latest financial report for the second quarter ending June 30, the company disclosed net sales of $65 million, compared to $50 million in the previous quarter. Gross Profit Margin was 35.5% as compared to 30.4% in the previous quarter and adjusted EBITDA amounted to $5.8 million, versus $3.3 million in the first quarter of 2022.
Following this report, Cantor Fitzgerald analyst Pablo Zuanic downgraded TerrAscend's stock to ‘Neutral’ from ‘Overweight’ and lowered its price target to $2.85 from $6.45.
TerrAscend might benefit from far-reaching operations across New Jersey and general retail/wholesale growth in the state, as well as Gage expansion in Michigan. It has “recreational optionality in Pennsylvania and Maryland (although so do several other multi-state operators.” Zuanic said, adding that these benefits may be overestimated by consensus.
Despite Zuanic downgrading the stock, and indicating overestimates, the stock performance over the years has been more than satisfying.
Here's how the returns break down from September 2017 to the present:
Facebook is down from $170.95 a share to $165.36 for a return of -3.27%;
Netflix is up from $176.42 a share to $230.04 for a return of 30.39%;
Alphabet Inc Class A is up from $47.07 a share to $109.74 for a return of 133.14%
Amazon is up from $48.30 a share to $127.82 for a return of 164.64%;
And finally, TerrAscend is up from CA$0.79 per share to CA$2.42 for a return of 206.33%.
Photo: Benzinga Edit; Sources: Kindel Media by Pexels
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