7 Best CBD Stocks To Invest In Right Now

4. SNDL Inc. (NASDAQ:SNDL)

Number of Hedge Fund Holders: 10

Next on our list of the Best Marijuana Stocks is SNDL Inc. (NASDAQ:SNDL), the largest private-sector liquor and cannabis retailer in Canada. The company also operates as a licensed cannabis producer, focusing on premium indoor cultivation, cutting-edge product development, and cost-effective manufacturing.

Like many of its peers in the cannabis business, SNDL Inc. (NASDAQ:SNDL) has been focused on sales growth instead of profits, increasing its revenue from $60.9 million in 2020 to just over $909 million in 2023. However, the Calgary-based company still hasn’t turned a profit in its last four financial years. This strategy seems to be changing now as SNDL announced a restructuring plan last year to help reduce its annual expenses by CA$20 million ($13.9 million) and finally improve its profitability. While the initiative will cost over $8 million, it is expected to leave the company in a much better position once it is all wrapped up by the end of this year.

In a positive development, SNDL’s free cash flow was finally positive in Q3 2024, supported by ongoing operational gains in gross margin and efficient working capital management. The company is on track to deliver positive free cash flow for the 2024 calendar year, meeting or even exceeding its guidance. It must be noted that SNDL is delivering this positive cash flow during a time when the Canadian cannabis sector is anything but vibrant.

SNDL Inc. (NASDAQ:SNDL) has plenty of cash in hand compared to its competitors and ended Q3 2024 with a cash balance of $263 million, up from $183 million in Q2, with no outstanding debt. To return value to its shareholders, the company also announced a share repurchase program of around $70.3 million in November.

SNDL Inc. (NASDAQ:SNDL) also has a good track record of utilizing its significant cash reserves smartly. A great example is its $320 million acquisition of Alcanna, the largest private liquor retailer in Canada, in 2022. The purchase seems to be paying off and SNDL’s Liquor Retail segment brought in $144.6 million in revenue in Q3 2024 with a gross margin of 25.6%, up 100 basis points YoY. The company still remains focused on strategic expansion and recently announced the acquisition of all outstanding shares of Nova Cannabis Inc., marking a major milestone. Moreover, it has also won a bid to acquire Indiva Limited, a leading producer of cannabis edibles in Canada.

SNDL Inc. (NASDAQ:SNDL) is also well-positioned in the US cannabis market. The company, through its subsidiary SunStream USA, holds a two-thirds economic interest in Surterra Wellness, a notable medical cannabis operator in Florida with a 10% market share.