Is Cresco Labs stock a good cannabis company to buy?

June 28, 2023 07:36 AM PDT | By Invezz

Is Cresco Labs stock a good cannabis company to buy? — Image source: Invezz

Modest improvements

Cresco Labs is a Canadian company that has huge operations in the United States. The company operates retail stores in key states where people can buy assorted cannabis products. In 2020, it launched Sunnyside, an e-commerce platform where people can shop capsules, vapes, concentrates, edibles, flowers, and other products.

Sunnyside is having strong growth. In the most recent quarter, its cumulative sales jumped to over $1 billion for the first time on record.

Cresco Labs revenue in the quarter came in at $194 million, a 3% decline from the previous quarter. It attributed this decline to Illinois, where growth has eased in the past few months. The company ended the quarter with $90 million in cash, It is also working to improve its spending in a bid to reduce its cash outflows.

Cresco Labs has been improving its operations. In 2022, it revenue jumped to over $824 million while its total loss narrowed by over $100 million to $212 million. Analysts now believe that the company will break even in 2025.

Therefore, while the company is losing money, it is doing better than other cannabis companies like Cronos Group and Canopy Growth. I believe that Sunnyside’s e-commerce platform will help to support this growth.

The biggest risk for Cresco Labs is the acquisition of Columbia Care, a company whose growth has been sluggish. Columbia’s revenue came in at $125 million in the last quarter. It lost more than $36 million during the quarter.

Cresco Labs stock price forecast

Cresco Labs chart by TradingView

The daily chart shows that the Cresco Labs share price has moved sideways since April. It has remained slightly above the year-to-date low of $1.38. The stock has also remained below the important resistance point at $1.95, the highest point on May 25th. As a result, it is hovering near the 25-day and 50-day moving averages.

Cresco Labs stock price remains sharply below the all-time high while the MACD is moving below the neutral point. Therefore, the outlook of the stock is neutral and I expect it to remain in this range for a while.

A break below the support at $1.38 will signal that there are more sellers in the market. If this happens, the next level to watch will be at $1. On the flip side, a move above the resistance point at $1.95 will signal that there are still more buyers left.

The post Is Cresco Labs stock a good cannabis company to buy? appeared first on Invezz.

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