Trulieve Cannabis Corp (OTCMKTS: TCNNF) is a buy on the dip, after a recent correction lower. The stock has bounced off a critical support level, as alluded in our previous update, all but affirming its breakout credentials. Confirmation of record revenues in the recent quarter is a catalyst likely to fuel further rallies.
Trulieve Price Analysis
Earnings growth is another milestone that underscores why the stock is likely to re-rate higher as underlying fundamentals continue to turn bullish. A rapid expansion drive has seen the Company open its 27th dispensary in Florida as it continues to strengthen its distribution network in the multi-billion-dollar sector.
Expansion into other states in pursuit of opportunities for growth has also come into play as Trulieve looks to strengthen its growth metrics. First quarter financial and operational results underscore the Company’s ability to deliver on strategic initiatives.
The stock resuming its uptrend thus does not come as a surprise as it has been trending higher for the better part of the year. Price action activity indicates Trulieve Cannabis could be on its way back to this year highs.
The $15 mark is the immediate resistance level standing in the way of the stock re-rating higher as a breakout play. A surge followed by a close above the $15 technical level should open the door for Trulieve Cannabis to make a run for 52-week highs.
Conversely, the $11 mark is the immediate support level, above which the stock remains bullish and likely to continue edging higher. A violation of the support level would leave the stock susceptible to further drops.
Trulieve Cannabis Background
Trulieve Cannabis casts itself as a medical marijuana company engaged in the cultivation, production, and distribution of CBD infused products. The Company distributes its product to Trulieve branded stores as well as patients through home delivery.
Record Revenues And EBITDA Growth
Shares of Trulieve Cannabis have started bottoming out after a minor correction as investors react to an impressive Q1 financial report. Management affirming that Q1 marked another milestone in record revenue all but continues to strengthen the stock’s sentiments in the market.
Revenue in the quarter was up 192% to $44.5 million as EBITDA increased from $6.1 million as of last year to record highs of $19 million. In addition to strong financial results, the Company achieved significant milestones in the quarter key among them being the expansion in Florida with the opening of a multitude of dispensary locations.
“Growth continued in Florida with the opening of four new dispensaries, completing the first sale of smokable flower in Florida, and settling with the Florida Department of Health, allowing us an additional 14 stores above the state cap,” explained CEO Kim Rivers.
Considering the positive operational and market developments, the Company is projecting revenues of between $220 million and $240 million for the full year, representing a growth of between 114% and $133%. The guidance takes into consideration the impact of setting up operations in Massachusetts, Connecticut, and California.
The Healing Corner Acquisition
Going forward, Trulieve is planning to establish operations in additional states having already achieved its target of 30 stores in Florida. The Company has already completed the acquisition of The Healing Corner as part of its expansion drive.
With the acquisition, Trulieve expands its operations into Bristol, Connecticut, which becomes its fourth market.
“One of the core pillars of Trulieve expansion is to seek opportunities with financial discipline and focused approach to brand and customer experience. The Healing Corner has demonstrated a strong track record of profitable growth, and we believe we are well-positioned to leverage our combined vision of delivering exceptional customer experience and best-in-class products,” stated Ms. Rivers.
Trulieve impressive run in the market is likely to continue as the stock has bounced off crucial support following a minor correction. Record revenues and EBITDA are some of the milestones that affirm why the stock deserves a higher valuation.
For investors looking for a high reward stock, then Trulieve is an ideal pick as a fundamentally attractive investment after the recent correction lower. Strong price performance and favorable technicals suggest the stock is on the right track and likely to climb higher as 2019 progresses.
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Disclosure: We have no position in TCNNF and have not been compensated for this article.