Trulieve Cannabis Corp. (TRUL.CN, TCNNF)| Daily Alert May 24
Trulieve Cannabis Corp. is a vertically integrated cannabis company which operates under licenses in six states including Florida, Massachusetts, California, Connecticut, Pennsylvania, and West Virginia. It cultivates, produces, and sells medicinal-use and recreational cannabis products within these states. Of the six states, only California and Massachusetts allow both the sale of medical and recreational cannabis.
On May 10, Trulieve and Harvest Health & Recreation Inc. announced they entered into a definitive agreement through which Trulieve will acquire all of the shares of Harvest for stock of Trulieve, representing total consideration of approximately $2.1 billion. This is a good deal for Trulieve.
Based on the midpoint of management’s forward fiscal 2021 EBITDA guidance of $365 million, TRUL is trading at under 13 times forward EBITDA. And based on the company’s trailing EBITDA of $255.6 million, the company is currently trading at 17.5 times trailing EV/EBITDA.
If TRUL is able to meet management’s fiscal 2021 guidance of $365 million, and trade with a justified EV/EBITDA multiple of just 16.5 times—relatively conservative compared to its current trailing figure—we estimate fair value for the stock over the mid term to be approximately C$62 per share. Buy.
Ryan Irvine in Gordon Pape’s Internet Wealth Builder, buildingwealth.ca, 1-888-287-8229, May 17, 2021
Dollar Tree, Inc. (DLTR) | Daily Alert June 4
P/E Growth: Peter Lynch
Dollar Tree, Inc. is an operator of discount variety stores. Its segments include Dollar Tree and Family Dollar.
DLTR is considered a “True Stalwart,” according to this methodology, as its earnings growth of 18.24% lies within a moderate 10%-19% range and its annual sales of $25,702 million are greater than the multi-billion-dollar level. This methodology looks for the “Stalwart” securities to gain 30%-50% in value over a two-year period if they can be purchased at an attractive price based on the P/E to Growth ratio. DLTR is attractive if DLTR can hold its own during a recession.
YIELD ADJUSTED P/E TO GROWTH (PEG) RATIO: PASS
The Yield-adjusted P/E/G ratio for DLTR (0.86), based on the average of the 3-, 4- and 5- year historical eps growth rates, is O.K.
EARNINGS PER SHARE: PASS
The EPS for a stalwart company must be positive. DLTR’s EPS ($6.22) would satisfy this criterion.
TOTAL DEBT/EQUITY RATIO: PASS
This methodology would consider the Debt/Equity ratio for DLTR (43.55%) to be normal (equity is approximately twice debt).
John Reese, Validea Hot List Newsletter, validea.com, 877-439-0506, May 28, 2021
*Darling Ingredients Inc. (DAR)
Darling recovers and converts recycled oils (used cooking oil and animal fats) into valuable renewable diesel fuel. Darling also provides environmental services, such as grease trap collection and disposal services to food service establishments.
In fiscal year 2020, Darling generated $3.6 billion in revenues and $327 million in net income attributable to Darling.
There’s a 400 million gallon per year expansion at Norco (costing $1.1 billion), which represents an increase of 137%, and is on track to begin production in the middle of Q4 of 2021. So that will give EPS quite a boost in 2022 and then a second capacity expansion, this one taking place in Port Arthur, is expected to add another 470 million gallons and be operational by H2 2023, giving 2023 and 2024 a further boost.
The company is conservatively saying that with the Q1 EBITDA margin of $2.77/gallon in Q1, it now projects $2.20 – $2.40 margin for all of 2021. Analysts see EPS growing 76% this year to $3.45 and to $4.75 in 2022, but they have estimated too low by an average of 31% in the past 4 quarters.
Zacks gives DAR a 2 ranking, the IBD composite is 93 and the BI Rank is a strong 10.9- Buy.
Tom Bishop, BI Research, biresearch.com, June 2021
*Bright Horizons Family Solutions Inc. (BFAM)
Bright Horizons Family Solutions is one of the nation’s largest networks of childcare services and a return to normal means a return of customers.
But the future looks even more promising than the pre-pandemic past.
About three-fourths of households with kids are scared of the damage the pandemic may have done to their child’s development. And most of them—as concerned parents—are actively looking for ways to undo that damage.
Which brings us back around to Bright Horizons. It’s a childcare and extended education company that’s about to have its greatest year ever. The biggest piece of Bright Horizon’s pie is day care, after school care, and extended education.
With its core services actively addressing the biggest parental worries caused by the pandemic—not to mention ordinary demand backed up by a year of isolation—there might not be a stock I’d rather own today.
Ian Wyatt and Ryan Cole, Ian Wyatt’s Million Dollar Portfolio, wyattresearch.com, May 28, 2021