Stone Fox Capital

About the Author Stone Fox Capital

Stone Fox Capital Advisors is a registered investment advisor founded in 2010. The firm offers portfolio management with a focus on opportunistic stocks providing secular growth trends at an affordable value. An emphasis is placed on fundamental analysis though charts are used for timing entry and exit points. Mark Holder graduated from the University of Tulsa with a double major in accounting & finance. Mark has his Series 65 and is also a CPA. Invest with Stone Fox Capital's model Net Payout Yields portfolio on IB Asset Management as he makes real time trades. The site allows followers to duplicate the model portfolio in their own brokerage accounts. You can find the portfolio and more details here: Follow Mark on twitter: @stonefoxcapital

This Cannabis Stock Is Poised to Benefit From Multi-State Expansion

Green Thumb Industries (GTBIF) has suddenly become an under the radar multi-state (MSO) cannabis operator in the U.S. The company has slowly expanded via small acquisitions that haven’t gotten the same attention as competitors in the sector, but GTI is positioned to become a significant player in the industry as rapid state expansion allows this company to grow up in a hurry.

Rising Into Ohio

GTI started May be opening two Rise retail locations in Ohio. The company now has 18 retail locations with licenses for up to 77 locations and up to 88 with the closing of several deals.

GTI has plans for 3 more stores in Ohio plus a processing facility in the state. The state is expected to have up to 300,000 patients on medical cannabis as the market recently opened up.

The Chicago-based cannabis company has just recently opened a second retail location in Florida. In Q4, GTI only generated operating revenues in five markets: Nevada, Illinois, Pennsylvania, Massachusetts and Maryland.

Besides the above-mentioned plans in Florida and Ohio, GTI has deals in place to enter New Jersey, Connecticut, California and Colorado. The company will go from 14 open stores at the end of 2018 to an additional 15 to 20 stores added in 2019. Plus, GTI added the Beboe luxury cannabis brand that also offers a CBD product line called Beboe Therapy.

The basis of the investment story is that GTI has substantial expansion plans that are generally being over looked with the stock mostly flat for the last year.

Business Update

As with a lot of the MSOs, the business is soaring via additional licenses in new states and retail store openings combined with numerous acquisitions. GTI reported Q4 revenues of $20.8 million with pro-forma revenues of $44.0 million.

Those revenue totals are some of the largest levels in the sector even including the Canadian LPs that grab all of the headlines. At the same time, GTI has a listed market cap below $3 billion as the stock has stalled over the last year.

When the company finally reports Q1 results on May 30, the market will get a better insight into the progress that GTI has made from a financial perspective.  The company started 2019 with annualized pro-forma revenues of $176 million and a business that will at least double retail stores and states where the company generates revenues.

With activist investor Marcato Capital Management arguing against the Canopy Growth (CGC) right to purchase Acreage Holdings (ACRGF), the best opportunity is to invest in MSOs like GTI that aren’t already encumbered with bad deals. Marcato believes U.S. cannabis stocks will surge with federal relaxation of cannabis laws making the best investment being long the MSOs that haven’t cashed out already like Acreage.


The key investor takeaway is that GTI remains a great expansion story in the key U.S. cannabis market. The stock has a reasonable valuation that should become more appealing now that competitors like Acreage Holdings are currently off the market.

To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.


Disclosure: No position.

Read more: Green Thumb Industries (GTBIF) Can Rally 25%, Says Analyst 


Stay Ahead of Everyone Else

Get The Latest Stock News Alerts