Trulieve TCNNF Stock Forecast & Analysis

Trulieve TCNNF stock will be one of the pillars of the cannabis industry.  And, because of its remarkable revenue growth rates, improving margins, and large foundations it is one of my Top Picks – The Best Cannabis Stocks.  I wanted to formally put the TCNNF stock forecast out there so that I can establish where this stock should be given an improved investment environment.  Ultimately, TCNNF stock is a value investing dream as well as a growth stock opportunity of a lifetime.

From a metric standpoint, Trulieve is doing well.  But, there are areas where improvements can be made.  And, savvy investors will see that as the opportunity.

Revenues are going to grow continuously as this behemoth exerts itself in the market and commands even more market share.  And, along with the increasing revenue, look for economies of scale to slingshot margins to better levels.  Then, these improvements trickle downward to the bottom line where profits will grow.

Looking at TCNNF stock from this point, with Trulieve’s potential to improve in revenue growth, margins, and profits, a long term value investor would see TCNNF stock as a potential company to outpace the market.

This is what value investors look for.

Trulieve TCNNF Stock Financial Data

Here is the latest financial data on Trulieve.  I have incorporated this into the TCNNF stock forecast and will continually update the TCNNF stock forecast as material changes come in.

Trulieve Gross Profits

  • Trulieve Revenue

At 55%, Trulieve is not at the top of the list of best cannabis stocks.  However, it is actually one of my top picks simply from its acquisition of Harvest Health.  But, these are the early stages.  And, economies of scale with even more increases in revenue will add potentially more gross profits via improving gross margins.

While Trulieve continues to expand into new markets, there is a significant amount of growth available throughout the various states. Trulieve’s margins will continually improve as more stores are opened in these states and organic growth continues to grow.

Trulieve Operating Profits

  • Trulieve Operating Costs

There is plenty of room for improvement in operating profits relative to revenues, what are called operating efficiencies.  The very best cannabis companies are printing between 30% – 35%.  But, even these numbers are high relative to where the future will be.

Operating efficiencies are going to be metrics that over the course of the next 5 years you will see continued improvements, as I discuss just below.  These improvements are what savvy investors are going to want to key in on as the industry grows.

For now, most of the costs involved with cannabis companies are growth at any cost.  But, some companies are going to run out of cash and they will start to address these costs more and more.  I can see Trulieve being pushed into a direction where this is a key factor in its future.

For now, Trulieve can easily improve here simply by creating more organic growth.  That takes time.  And, this process will continue to unfold.

Trulieve EBITDA & Net Profits

  • Trulieve EBITDA

The broader stock market, the S&P 500, prints approximately 20% – 22.5% EBITDA/Revenue.  So, any company that is higher here is outpacing the broader market.

But, with Trulieve, there is a big difference.  Some of the companies on the S&P 500 have been around for years and have fully saturated the Total Addressable Market (TAM).  Trulieve is not even a single-digit fraction of getting to this point.

I point this out for various reasons.  If you look again at operating efficiencies, the ratio of operating costs versus revenue, you can see that there is a lot of opportunity for improvement here.  The same companies that are printing 20% EBITDA/Revenue in the S&P 500 are also printing ~17.5% operating efficiencies.

Improving Revenue & Operating Efficiencies

Trulieve will grow into its operating costs with increasing revenue.  And, Trulieve will also contain the rate of growth of SG&A as it increases revenue, improving operating efficiencies.

This will have the effect of pushing the operating efficiencies number lower and lower (Since it is a ratio of cost versus revenue, you want the lowest possible number), this will add a potential 10% to EBITDA profits which, that will trickle down to net earnings.

I look for margins to improve over the next five years along with the increases in revenues.  And, I have included these considerations in the TCNNF stock forecast below.

Trulieve Cash On Hand

  • Trulieve Cash On Hand

From a cash:debt ratio, Trulieve is not the best cannabis stock out there.  However, what they lack currently in the company coffers, they make up for in equity (See below).

Cash is king.  Period.  Imagine if you are in a car and it runs off the side of a road into a lake and you are now underwater.  Oxygen is life.  As long as there is oxygen inside the vehicle, you can manage.  But, there is a time stamp on how much oxygen is left.  Cash?  It is just like that oxygen in a vehicle.  When it runs out, if you are a company underwater, you are done.

Trulieve?  They are hardly underwater.  I use that imagery for association so that some readers who are new to investing can solidify how important cash is.  Being a true leader in this category is important as it give all kinds of opportunities for future development.

That is also why I point out that Trulieve is low on cash relative to its size and the amount of debt it has.  It is not to say there are any issues whatsoever.  It is just not a cannabis company leader in this metric.

Trulieve can refinance some debt, pay down debt, improve metrics, and take on more debt in order to manage better in this regard.  But, that takes away other opportunities.

Trulieve Total Equity

  • Trulieve Total Assets

Looking at total equity, Trulieve is a behemoth.  And, the potential to leverage all of that equity and turn it into even more revenue & profit generating assets makes TCNNF a potential powerhouse.

You can see the big gains in total equity after the Harvest Health acquisition.  While Arizona is solidly contained, I would imagine further acquisitions that will continue to expand Trulieve’s foundation.  Why not get into Colorado & New Mexico in one big move with an acquisition of Schwazze?

In the meantime, Trulieve has slightly more than 2:1 ratio of assets:debt.  And, at the size, $3.5B:$1.5B, this is a tremendous amount of potential.

But, I caution using stock to get deals done.  TCNNF is undervalued and, moves doing all-stock deals could be dilutive.  However, any acquisition would be for cannabis companies that are also, simultaneously, undervalued.  As long as a small amount of premium is added, and nothing major such as the Cresco Labs & Columbia Care deal, then I could bite into this.

Trulieve will want to start leveraging its equity and continue to expand.  Look for additional M&A activity.

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Trulieve TCNNF Stock Forecast

Trulieve TCNNF stock DCF

When I put together the TCNNF stock forecast, I looked at the massive amount of potential within Trulieve given its total equity.  Trulieve is far from leveraging itself to its maximum and taking advantage of the equity it has built.  This is part of the long term process, however.

For now, margins come in above the broader market for Trulieve.  But, I think Trulieve can also push this much higher over the years as the company grows into its foundation and expands further.

I used 35x as the variable for EV/EBITDA future rate.  This could be looked at as kind of a popularity contest, of sorts.  If the TCNNF stock becomes far more popular, this will drive the stock value upward.  The EV, or Enterprise Value would go higher.  I could have justified 50x in this.  That would push TCNNF stock upward to about $175.00.  I was conservative given the investing environment for cannabis stocks right now.

I will continually update the TCNNF stock forecast as more information flows in, including revenue increases/decreases, and cannabis federal legalization.

Is Trulieve TCNNF Stock A Good Investment?

Trulieve TCNNF Stock Chart 15Aug22

Like all other cannabis stocks, the current investment environment is not working well for long term investors.  Notably, the continuous move lower, and lower, and lower, unabated, since the “Blue Wave” and the potential of cannabis federal legalization for 2022.  Truth is, Congress was not going to get their shirt sleeves rolled up immediately after being elected.

But, right now we are in fact awaiting cannabis federal legalization and, it looks as if the Senate version will be hitting the floor very soon.

When this happens, and immediately after passage, I am expecting some kind of push for cannabis federal legalization to occur with banking being the biggest key factor.  Also, this will likely allow for cannabis companies to up-list to Nasdaq where the environment for investing will improve significantly.

Up-listing to Nasdaq

This is really what a long term investor is looking for with regard to Trulieve.  Once TCNNF stock up-lists to Nasdaq then two different entities can get involved in trading TCNNF stock more frequently and with bigger dollar amounts: The novice Robinhood trader and Institutional investors.

For now, Robinhood traders are limited with which cannabis stocks they can get involved in.  Robinhood, and a few other mainstream brokerages, only allow for Nasdaq-listed cannabis stocks to be traded.  Volumes will increase in orders of magnitude once TCNNF stock up-lists.

But, the institutional investor will be the one who really elevates TCNNF stock.  This bigger institutions are going to want as much hyper-revenue growth as they can get their hands on.  The broader S&P 500 prints about 20% YoY revenue increases.  However, Trulieve prints about 30%, if not far more on an organic basis.

This will drive TCNNF as institutional investors start wading in.

So, while cannabis federal legalization is important, it is the next step of institutional investors stepping in that will get things moving forward.

TCNNF stock – What to expect

The current rationality of where cannabis stocks are on a valuation basis, compared to the broader market, makes no sense.  Growth rates exceed the broader market with cannabis stocks versus the S&P 500.

And, Trulieve is, mostly, profitable.  Trulieve has about a 26.5% EBITDA/Revenue profit margin, and I fully expect that over time, as the company grows into its structure, this number will improve.  And, Trulieve will also continue to acquire additional entities and expand its footprint.

Given this, I expect that some kind of bottom will be in place. And, the fact that cannabis federal legalization is very likely to occur this year, this may very well push TCNNF stock upward in a surge.

But, I expect that euphoria to die down.  However, the next move, no matter how long it takes, would be up-listing to Nasdaq which, that invites the real players into the market.

This will be supportive of TCNNF over the long term.  And, along the way, I will continually update the TCNNF stock forecast.

Remember: It is not an event… it is a process.

Trulieve Financial Statements

Trulieve TCNNF Stock Financial Statements

7 thoughts on “Trulieve TCNNF Stock Forecast & Analysis

  1. Thanks for sharing this analysis @dhtaylor.
    “And, the fact that cannabis federal legalization is very likely to occur this year, “I’m starting to worry if this will happen in 2022. If it doesn’t happen, I fear the losses will be worse than we’ve had so far. I shudder at that possibility because it has been excruciating (as you and most people here know). Many companies seriously need things to take off so they can survive (so they can eventually thrive). 

    1. @mikekorner 

      Hey Mike… I think we get there no problem.  Yes, lots of background noise with the War in Ukraine, abortion being a top priority for liberal left, etc. etc.  But, I absolutely believe that the process is still moving forward.  

      In the meantime, Trulieve is going to be a great performer; we are starting to see TCNNF stock slide higher.  I think we’ve hit that bottom.  

  2. What are you seeing that makes you think we’ve hit the bottom this time? We still have several months before mid-terms, stagflation is starting to show. average hourly earnings are decreasing and other indicators are showing caution.

  3. All I know is all stocks are getting hammered right now especially this one but hang in there.   
    If you want in on Trulieve this maybe a great time to get in since it is sitting at a very good buy in price.
    I don’t see it going any lower than $10.00 but it could.. I actually am going to add to my position on Trulieve 🙂

    1. @mattpaul02yahoo-com I would probably be adding TCNNF if I didn’t already own way too much. Definitely hard seeing a 50+% paper loss currently. But at $10, I may get stupid and buy more. Here’s hoping we never see $10. 

  4. Yes… cannabis stocks are losing the popularity contest.  But, just as they are currently under popular, they can easily one day be overly popular.  Image what that shift in status will do?

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