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Could Ayr Wellness be a millionaire share?

Everyone would love to become a millionaire by owning an investment, but what is the likelihood of that happening? For a $ 50,000 investment to reach at least $ 1 million over 30 years, it would have to grow at an average annual rate of 10.5%.

It’s not unreasonable, but if you’re looking at a 20-year period, the rate of return should be over 16%. And if you want that investment to make you a millionaire within a decade, you’ll need annual returns of almost 35%. That’s a better return than Warren Buffett’s average over the past 50 years of investing.

While the 10-year rate of return seems unlikely, over a 20-year period it is possible to become a millionaire if you have invested in the right kind of stocks. For example, investing in a high growth industry like cannabis can put you in a position to potentially do so. Specifically, a rising pot stock that could potentially position you for great returns is Ayr Well-being (AYRW.F -1.04% ).

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Large market outperformance over the past year

In 12 months, shares of Ayr Wellness rose about 240% and eclipsed the S&P 500yields of 32%. Investors began to be bullish on stocks late last year after President Joe Biden won the election, and optimism grew over the possibility of marijuana legislation.

It also didn’t hurt that Ayr Wellness showed strong results. On November 18, 2020, the company reported revenue of $ 46 million for the period ending September 30, 2020, an increase of 61% from the previous quarter. It also recorded adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of more than $ 19 million.

Fast forward to now, and the company continues to build on those numbers, generating sales of $ 58 million for the first three months of 2021. Its Adjusted EBITDA has now totaled at least $ 18 million for three quarters. consecutive. And the good news for investors is that the company is only scratching the surface in terms of potential.

Why Ayr Wellness might continue to be a hot buy

Long-term investors will want to focus on the company’s outlook for 2022, when it expects it to benefit from investment in multiple markets, including Arizona, Florida, Massachusetts, New Jersey, Ohio and Pennsylvania. The company predicts that by 2022, its revenue will reach $ 725 million and its Adjusted EBITDA will be $ 325 million.

If it achieves these goals, that would double its current results – Ayr Wellness expects that for the next quarter, its revenue will exceed $ 90 million. At $ 725 million, it would average over $ 180 million in quarterly revenue. Add to that a 45% EBITDA margin and you have a fast growing pot stock that is profitable as well. It’s a combination that could make Ayr Wellness a hot buy.

Currently, the stock is trading at a forward price / sell (P / S) multiple of 4.4, which is relatively cheap compared to other pot stocks:

JUSHF PS Ratio Chart (Forward)

JUSHF PS Ratio (Front) given by YCharts.

Can Investing In Ayr Wellness Make You A Millionaire?

Predicting how Ayr Wellness will do over the next 10+ years is a challenge. But based on the information available today and the growth opportunities ahead for the company in some hot cannabis markets, it is not unreasonable to expect it to continue to outperform the market. S&P 500, which on average generates returns of around 10% per year. The only benefit to cannabis investors is that any news about the legalization of marijuana, including more states allowing pot for adult use, could help Ayr Wellness and other pot stocks gain traction. value.

If you’re willing to invest $ 50,000 in Ayr Wellness, it could very well make you a millionaire, assuming it continues to perform well and the industry continues to grow. Once marijuana is legal in the United States – and it could be soon, with Senate Majority Leader Chuck Schumer recently unveiling a bill that would legalize the pot – the floodgates will undoubtedly open and the stockpile. Ayr Wellness could increase.

It would also make it easier for the company to expand into new markets. If all goes well, you might not need to wait 30 or even 20 years for your investment to hit the million dollar mark.

While it’s not a guarantee, Ayr Wellness certainly has the potential to make you rich in the long run.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.