The growth in the medical marijuana sector has led to the emergence of many companies in the industry. Two companies whose stocks have performed well over the past year are Cronos Group and Green Thumb Industries.
Both companies have been able to reward their shareholders with good returns over the past year. However, both stocks have shed much of the gains over the past few months. For potential investors, it is necessary to figure out which of the two is going to be better in the long run.
Cronos Group (CRON)
One of the most significant developments in the medical marijuana industry over the past year has been Altria’s investment in Cronos Group Inc (CRON).
Altria has a 45% stake in the company and the deal also gave Cronos a significant cash injection of $1.8 billion. In addition, one of Altria’s top executives joined Cronos as the Chief Financial Officer and the tobacco company also nominated four members to Cronos’ board.
The expertise and global presence of Altria will be key drivers for Cronos as it tries to take its marijuana products to different parts of the world. Additionally, Cronos also holds key supply agreements to 5 of the most populous provinces in Canada and that gives the company a significant competitive advantage. Last but not the last, Cronos is also looking to expand into international markets in a bit way.
Green Thumb Industries (GTBIF)
Now, Green Thumb Industries (GTBIF) does not have a partnership with a company like Altria, but it could be argued that the company does not need a helping hand.
Green Thumb’s revenues grew by as much as 278% in FY2018 and it could be argued that strategic acquisitions played a part in that performance. GTI’s sales growth was quite impressive as well. In addition to that, GTI’s footprint as a cannabis company is considerable. It has operations in 12 states and runs as many as 13 productions plants.
Moreover, Green Thumb has 21 retail stores and currently has permission to own as many as 67 more. It is also important to mention that GTI has a significant presence in the United States, the largest market for marijuana and according to analysts. It could be a $22 billion market within the next three years. Last but not least, GTI has swiftly entered into the hemp CBD market after it was legalized in the U.S.. It acquired the company Beboe, which is engaged in producing luxury hemp-based products.
According to experts, both companies could grow into leaders of the industry but currently, GTI is much better positioned than Cronos and generated much bigger revenues. At the same time, it cannot be ignored that GTI’s long term growth depends on the legalization of marijuana in the U.S. and that is perhaps the reason why it has a smaller market cap than Cronos. Legalization of marijuana in the U.S. is expected at some point in the near future and that makes GTI a better long term bet.
Published at Tue, 28 May 2019 20:06:38 +0000