Is Trulieve a Purchase After Acquiring Harvest Health & Recreation?
$ 2.1 billion is hardly a pocket change. But an ambitious Florida marijuana business Cannabis Trulieve (OTC: TCNNF) pony such a bunch – from his stock, anyway – to buy a west coast peer Harvest health and recreation (OTC: HRVSF).
As it reveals in this segment of Motley Fool LiveSeasoned Fool contributor Eric Volkman thinks it’s money (well, technically, company stock) well spent. He explains his reasons with Corinne Cardina, head of the health and cannabis office. This video was recorded on May 21.
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Corinne Cardina: Would you say Trulieve looks like a buy based on [the Harvest] acquisition?
Eric Volkman: Yes. It is not a cheap stock, and it is not a cheap stock, as Trulieve, so far following Harvest, has been one of the very rare and very specials. They are hardly multistate. Outside of Florida – up to Harvest again – they only had small operations in places like Pennsylvania.
But yes they were profitable, not always and because they were one of the few profitable MSOs investors really hung on to them. They are not cheap. But what I love about Trulieve is that they are very good at maintaining and even increasing their market share in Florida. They know their market very well and I think their strategy so far has been good for the places they’ve ventured into places like Pennsylvania which are limited license states where you only have a little one. number of licenses and, consequently, theoretically low competition.
I think Trulieve is expensive, but if a stock of marijuana is worth the price, it’s Trulieve. This profitability will be at stake with Harvest because Harvest, like many of its other peers, is consistently UNprofitable. In their last reported quarter, the first quarter, they lost almost $ 23 million. It’s not the end of the world, but with the merged company it’s going to affect the bottom line.
However, they are progressing in terms of turnover. In their quarter they made almost $ 89 million and it was 27% higher quarter by quarter which is admirable for the most recent set of results it is higher and slightly more than double. from one year to the next. I think Trulieve gets one of the best assets and again I like the geographic and complementary nature of it.
Corinne Cardina has no position in any of the stocks mentioned. Eric Volkman does not have a position in any of the stocks mentioned. The Motley Fool owns shares and recommends Trulieve Cannabis Corp. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.