On today’s Marijuana Market Update, I’ll answer a viewer email about a popular cannabis stock: Jushi Holdings Inc. (OTC: JUSHF).
Dan recently emailed me to ask:
Hi! Been watching JUSHF for quite a while and now that it’s around $1.60 per share, do you think we are at the bottom and it presents a solid, long-term buying opportunity?
Thank you for your question, Dan.
First, let’s talk about the company.
Jushi Holdings Inc. Deep Dive
Jushi Holdings Inc. (OTC: JUSHF) is based in Boca Raton, Florida. It cultivates, processes and distributes medical and adult-use cannabis products in Pennsylvania, Virginia, Ohio, Illinois, California, Nevada and Massachusetts.
It also offers hemp-based CBD products under brand names like:
- The Bank.
- The Lab.
- Nira+ Medicinals.
- And Tasteology.
Jushi also operates 32 retail locations.
During the first quarter of 2022, JUSHF:
- Acquired The Apothecarium, a Las Vegas-based adult-use and medical cannabis dispensary chain.
- Acquired NuLeaf Inc. in Nevada, which includes a massive cultivation plant and processing facility.
- And it launched its flower brands, The Bank and Seche in Massachusetts.
But Jushi’s stock is still well off its highs.
When Dan wrote me last week, Jushi traded around $1.60 per share. Since then, it fell to around $1.49 per share.
JUSHF rose 2% on Monday as the rest of the market sold off. That’s not market-beating movement, but it’s something to consider.
The stock is about $0.80 below its 50-day simple moving average — which is bearish.
JUSHF Cannabis Power Rating
Let’s look at our Cannabis Power Ratings system to see where JUSHF ranks among other cannabis stocks.
Overall, the stock scores a 32, which is “Bearish,” with a 12 on momentum and a 60 on value.
JUSHF has crashed 74% in the last 12 months. Monday’s 2% jump was nice to see, but it’s too soon to tell if this is a sustainable uptrend.
So let’s focus on its value.
JUSHF Value + Holdings
I compared its price-to ratios (earnings, sales and book values) to industry averages. In this case, the program I use compared Jushi to the agriculture industry.
For the record, the program I use puts most cannabis growers in the agriculture industry.
Right now, JUSHF has a price-to-earnings ratio of 6.43, compared to the industry average of 13.4 — so Jushi is about half the average … which is good in terms of value.
Its price-to-sales ratio is 1.22, while the industry average is 4.22 — another good sign for JUSHF’s value.
However, its price-to-book ratio is 1.39 … a bit higher than the industry average of 1.14.
All of this suggests that JUSHF is a decent value when compared to other industry-related stocks.
Long-Term Potential for JUSHF
To answer Dan’s question, I think there are strong long-term prospects for JUSHF, but I don’t know if the 2% uptick at the beginning of the week is enough to go on.
That is the biggest issue I have right now with this and other cannabis stocks.
I just don’t know if we have hit a bottom yet.
If the broader market downturn continues, it will present stronger headwinds for the entire cannabis market. Investors are watching two things right now: the overall trend in stock prices and cannabis legalization efforts.
Bottom line: JUSHF is expanding more into Nevada and growing product offerings in other states. And it’s doing so at a pace as not to overextend. Acquiring a cultivation and processing facility along with new retail keeps potential supply issues to a minimum.
In all, I want to see a more profound uptrend in the stock before I would sign off on a buy here.
That’s all for me this week.
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Safe trading,
Matt Clark
Research Analyst, Money & Markets