Marijuana Stock Pick: Trulieve Cannabis Corporation (TCNNF)

Marijuana

Trulieve Cannabis Corporation (TCNNF) is a company that provides medical cannabis products. The offerings of Trulieve Cannabis are known to alleviate a number of conditions including seizures, pain, muscle spasms, and other symptoms associated with serious maladies such as cancer. The company grows their products in-house and sells them via their branded dispensaries or home delivery. For fiscal 2018, the firm generated revenue of CA$133.27 million while employing 1,787 people.

Technical Analysis of Trulieve Cannabis Corporation (TCNNF)

A quick look at the weekly chart shows that Trulieve Cannabis is in a position to end its four-month long correction.

On April 4th, the stock posted a 2019 high of $16.23. Since then, this security has been controlled by the bears. The selling pressure was so strong that TCNNF dropped to as low as $8.95 on July 24th. That’s a deep plunge of over 44% in less than four months.

Nevertheless, the stock looks ready to reverse its trend. We can see one more leg down before it finally regains its bullish sentiment.

Technical analysis shows that TCNNF is printing a large falling wedge on the daily chart. We were hoping for a breakout yesterday but instead, the market respected the diagonal resistance of the wedge. Therefore, we can see one more move down before the breakout. At that point, the stock would be trading at the apex of the wedge.

Fortunately, technical indicators support our bias. Volume has been declining since April. Also, the daily RSI is moving close to oversold conditions. If the stock moves as expected, it will likely flash oversold readings around $9.00. The condition should ignite a bounce that would enable TCNNF to break out of the wedge.

Fundamental Analysis of Trulieve Cannabis Corporation (TCNNF)

On top of our technical analysis, fundamental analysis also supports our bullish view.

A look at the income statement of the company reveals its tremendous growth in the last three years. In 2016, TCNNF posted a top line of CA$213,505. Fast-forward to 2018, the number skyrocketed to CA$133.27 million. That’s a whopping growth of over 62,320% in just two years. These numbers alone tell us that there’s a huge demand for Trulieve’s products.

In addition to that, net income rose from a meager CA$4.64 million in 2017 to CA$55.69 million in 2018. That’s a massive jump of over 1,100% in just a year.

More importantly, the company is expecting to continue building on its profits over the next couple of years. This year, Trulieve Cannabis Corporation projects an annual revenue that’s in the $220 million and $240 million range. In 2020, the firm forecasts a topline between $380 million and $400 million. In other words, there’s huge upside potential for TCNNF.

The strategy is to buy as close to $9.00 as possible. If bulls can keep the market from falling further, TCNNF will target $12.00. Take that out and $16 is next.

The timeline for the target is less than a year.

Daily Trulieve Cannabis Corporation (TCNNF) Chart

TCNNF daily chart
Trulieve Cannabis Corporation (TCNNF) daily chart

Weekly Trulieve Cannabis Corporation (TCNNF) Chart

Trulieve Cannabis Corporation (TCNNF) weekly chart
As of this writing, the Trulieve Cannabis Corporation (TCNNF) stock is trading at $10.48451.

Summary of Strategy

Buy: As close to $9.00 as possible.
Targets: $12.00 and 16.00.
Stop: $8.55

 

Disclaimer: The writer does not own shares of Trulieve Cannabis Corporation (TCNNF).
Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.