Positive improvements on the regulatory front have sparked a revival in the cannabis business. There has been a resurgence in the cannabis industry thanks to recent efforts taken by the United States Department of Health and Human Services and Senate Majority Leader Chuck Schumer, which could eventually lead to federal legalization.
Sundial Growers Inc. (SNDL) and Verano Holdings (VRNO.F) are two marijuana companies that have gained the attention of Wall Street analysts due to the potential for large gains in this market.
Sundial Growers Inc. (SNDL): A Remarkable Turnaround Story
Canadian startup SNDL went from an underperforming cannabis producer to an industry leader in consumer packaged goods and cannabis investments in a remarkably short amount of time. Alcanna in 2022 and The Valens Company in 2023 were key purchases that contributed to this shift.
By purchasing Alcanna, SNDL gained access to the largest private alcohol retail network in Canada, giving the company a strong foundation in the Canadian market. Meanwhile, SNDL’s cannabis product range and efficiency were greatly improved after the merger with The Valens Company.
Consequently, SNDL is well on its way to becoming profitable by 2024, an impressive achievement given the fierce competition in the Canadian cannabis business.
The fact that SNDL has the potential to profit from the expanding legal cannabis market in the United States makes it an appealing investment.
As more states in the US legalize marijuana for medical and recreational use, SunStream Bancorp, SNDL’s investment arm, allows the business to participate in leading U.S. cannabis companies like Columbia Care without risking delisting from the Nasdaq.
Therefore, SNDL provides investors with a rare chance to benefit from the growing trend of cannabis legalization in both Canada and the United States.
While the unpredictable cannabis market may have a short-term impact on SNDL’s share price, the company’s amazing turnaround, powered by its aggressive acquisition strategy, may ultimately convert into a value-driven growth story.
According to the consensus of sell-side analysts, SNDL is undervalued by a significant 66% based on the average 12-month price objective set for the stock.
Notably, due to the inherent volatility of the cannabis market, it is difficult to forecast whether SNDL will reach this price goal during the next 12 months. Shares of SNDL should benefit in the long run from the company’s strengthening fundamentals.
Verano Holdings (VRNO.F): Leading the U.S. Cannabis Market
With a footprint in 14 states, active operations in 13, and 132 open dispensaries, Verano Holdings has emerged as a major participant in the U.S. cannabis business. The business acts as a vertically integrated manufacturer and retailer of premium cannabis products, with a wide range of brands aimed towards different demographics.
Verano, Avexia, Encore, and MÜV are some of its well-known brands, and they each offer a wide variety of goods, from edibles to topicals. Zen Leaf and MÜV are two unique dispensary concepts that set Verano apart and give customers a first-rate buying experience.
Verano is a stock worth considering as an investment for a number of reasons. First, the corporation has been actively increasing its presence in high-growth markets like Connecticut, Florida, New Jersey, and Pennsylvania. Verano reported a 5% rise in revenue in the second quarter of 2023 compared to the second quarter of 2022.
Second, the growing movement to legalize cannabis in the United States presents a significant opportunity for Verano by opening up new markets and customers. Verano’s extensive presence across numerous states positions company for significant development as more states legalize cannabis.
Finally, Verano is a desirable acquisition target in the market. Verano’s potential as a takeover target is notable due to the company’s strong brand portfolio, efficient operations, and the ongoing consolidation within the cannabis market.
The consensus 12-month price objective among Wall Street analysts covering Verano Holdings indicates a large 79% upside potential from current levels. Although such a lofty goal may seem unrealistic under normal conditions, Verano is prepared to ride the legalizing wave to greater valuations, potentially drawing acquisition interest at a premium.
In conclusion, new laws and widespread acceptance of cannabis have stoked an industrial revival. Two companies that are well positioned to benefit from this trend are SNDL and Verano Holdings.
Verano’s dominant position in the U.S. market and potential for expansion and acquisition make it a prominent contender, while SNDL’s spectacular turnaround and exposure to both the Canadian and U.S. markets make it an attractive pick.
Wall Street analysts have a generally optimistic view of these stocks’ long-term growth potential, so some volatility is to be expected in the near future.