Cannabis stocks started selling off in the second half of 2019, but this sector still has excellent long-term potential. Weed stocks may be down, but they’re not out. The sector is just getting off the ground and pot stocks could net huge returns for investors at these prices. Any good trader should be looking to buy when prices are low so, if you made a nice profit the first time around, brush up on the best weed stocks and get positioned for round two!
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Best Marijuana Stocks To Buy
Canopy Growth ( NYSE: CGC )
Canopy Growth is one of the leading marijuana stocks, but not even this heavyweight escaped the summer sell-off. CGC struggled with the rest of the sector in 2019, and it’s now trading close to all-time lows. Analysts are raising concerns about US$1.54 billion in goodwill assets on the company’s books, which they say could eventually result in a massive write-down if the business doesn’t pick up soon.
CGC sold off after the company’s last earnings call, after reporting a wider than expected loss for the quarter. The miss was largely attributed to a one-time expense but, nonetheless, shares plummeted following the release of the report. Interestingly, without the one-time write-off, CGC would have posted narrower-than-expected losses for the quarter, but that didn’t provide much consolation for the shareholders. Canopy shares fell over 10% in the aftermath of the report.
Despite its recent difficulties, Canopy has lots of resources and access to capital. Its partnership with Constellation Brands (NYSE: STZ) should prove invaluable when Canada finally legalizes infused beverages, which is expected to happen in December 2019. Once the smoke clears and the bodies are taken away, Canopy Growth could be one of the few original weed stocks left standing.
Cronos Group ( NASDAQ: CRON )
Cronos Group made its IPO on the NASDAQ in 2018, and the stock went for a wild ride during that course of time, along with the rest of the cannabis stocks. This company doesn’t operate any marijuana growing facilities, it’s a principal investment firm. The company, formerly known as PharmaCan Capital Group, provides equity capital to businesses that produce medical marijuana under Canadian MMPR (Marijuana for Medical Purposes) regulations.
Cronos offers cannabis and cannabis oil under the brand name “Peace Naturals”. Recently, an increasing portion of their sales revenue has come from cannabis oils, and Cronos has made several investments to promote their development of such products. Cronos is developing a new extraction lab and has announced a partnership with Ginkgo Bioworks to develop a manufacturing method that would produce organic cannabinoids without extracting them from a plant. The technology could prove to be a game-changer.
Marlboro manufacturer Altria ( NYSE: MO ) took a 45% stake in the company for approximately $1.8 billion. Share prices promptly tripled from Q2 lows but have since cooled along with the rest of the market. This deal positions Cronos Group for the future and gives them a solid financial foundation to rest on. Look for CRON to be an enduring presence as the marijuana industry continues to evolve.
Tilray ( NASDAQ: TLRY )
Tilray is a full-service cannabis enterprise. It operates in a variety of marijuana-based capacities and has international distribution streams in several countries. Based in Nanaimo, Canada; the company has a mid-sized market cap of around $7.3 billion. Tilray made its IPO in July of 2018 and, by September, the stock peaked at approximately 15 times its IPO price. The stock went to $300 per share before crashing down to Earth. This stock has been extremely volatile since its initial public offering, but the hysteria has settled as of late. Since then, Tilray’s stock has been consistently trading around $40 per share.
Tilray boasts an impressive list of international licenses and is approved to operate in Australia, New Zealand, Canada, Argentina, Germany, Chile, and more. With all their international experience, it’s likely Tilray has intentions to widen its international exposure further.
Charlotte’s Web Holdings ( OTC: CWBHF)
Charlotte’s Web has one advantage over the other companies on this list, its main product isn’t federally illegal! The company produces all-natural CBD products and it currently has a presence in over 6,000 retail stores and it’s the number-one CBD producer by market share!
The U.S. enacted the Farm Bill in 2018 and federally legalized hemp, causing the CBD market to take off. Charlotte’s Web is an early innovator and it did an excellent job building and promoting its brand. The company produced over 675 thousand pounds of hemp in 2018, and it has 700 acres planted for this season.
Charlotte’s Web is a market leader with plenty of room to grow. It’s not marijuana, but it’s a cannabis-related play that could be the best of the bunch.
Aurora Cannabis ( NYSE: ACB )
One of the most diversified cannabis stocks on the list, Aurora Cannabis boasts a diverse portfolio of cannabis operations. The company has exposure to the entire cannabis industry. The company produces cannabis, concentrates, edibles, CBD, and more. Aurora also has research operations developing an array of cannabis-related products and expertise. Aurora operates several subsidiaries and brands that cater to every imaginable niche of the consumer marijuana market. Some of its brands include CanniMed and CanvasRX. The company has collaborative agreements with PharmaChoice and Shoppers Drug Mart to help facilitate distribution to medical customers.
The stock has traded with stability in comparison to the other marijuana stocks listed here, but it still exhibits some dramatic moves. Interestingly, Aurora is possibly the only company on this list to have positive EPS numbers last year. While other companies are burning through cash, Aurora is at least netting some positive earnings.
However, the company is still in the midst of significant expansion. There are not many marijuana companies that can produce more at peak capacity than Aurora. That gives them a huge advantage in the Canadian marijuana market.
While Aurora is undoubtedly one of the largest producers, it still has some hurdles ahead. They are facing increasing competition in the Canadian cannabis market. Aurora will have to work harder to compete moving forward, but they have the output and infrastructure to make it happen.
Medical Marijuana Stocks
Some experts believe that the real opportunity is in medical cannabis stocks. Here are some of the leading companies in the field.
Curaleaf Holdings Inc. (OTC: CURLF)
Massachusetts-based Curaleaf is one of the best pure-play medical marijuana stocks on the market. It was one of the best performers in the sector for the first half of 2019 and it held up better during the sell-off than many other popular weed stocks. Shares are up 53% on the year, despite selling off with the rest of the sector in May and June.
Curaleaf introduced the first-ever line of cannabis tablets for medical use in mid-September, provoking a nice reaction in the stock. Additionally, the company is expanding into the recreational sector in order to supplement its already-robust medical marijuana business. The Massachusetts State Cannabis Control Commission recently approved several of Curaleaf’s adult-use license applications. The approval clears the way for the firm to expand operations at an existing retail location at Webster, MA and a production facility in Oxford. In addition, they’ll open two new locations in Provincetown and Cape Cod. The new locations will bring the total number of cannabis retail locations to 4.
Liberty Health Sciences (OTC: LHSIF)
Though headquartered in Toronto, Liberty Health Sciences primarily operates medical dispensaries in The State of Florida. The company boasts the second-highest cannabis flower sales in the Sunshine State, and it recently opened its 17th dispensary in Panama City, FL.
While Liberty’s $124 million market cap isn’t as beefy as the big players, it offers a direct way to play the medical cannabis trend in an established market. The company is trying to get its income statement under control, but operating losses spiked in Q2 2019. Despite the setback, revenue grew 59% from the previous quarter.
Revenue growth looks promising for Liberty, but the firm needs to get its spending under control if it wants to be a long-term player in the medical marijuana sector.
Marijuana Stocks and The Effect of Canadian Legalization
On October 17th, 2018, Canada became only the second nation to legalize marijuana. The day marked the end of one era and the start of a new one. In the US; Michigan, Missouri, and Utah enacted favorable cannabis legislation in 2018, and a wave of pro-pot candidates were elected to house and senate seats. Suddenly marijuana was becoming more and more accepted by the widespread public. Public opinion on cannabis has changed dramatically in the past 10 or 15 years. These days, we’re in the midst of cannabis craze. 2019 is expected to be an even bigger year for the still-fledgling marijuana industry. Research estimates global marijuana spending to reach $32 billion by 2022, more than tripling 2017’s $9.5 billion.
In 2018, pot stocks boomed as marijuana mania rocked the investing world. Leading up to the day Canada was scheduled to legalize, cannabis stocks saw a frenzy of activity. Law-abiding investors were seizing the opportunity to invest in the newly legitimate business. Many analysts on Wall Street blamed these retail investors for the unprecedented volatility in the stocks. Investors everywhere want to get a piece of the cannabis market.
Best Cannabis Stocks: A Complicated Space
However, investing in this space isn’t easy. There are so many weed stocks on the market that it’s hard to spot winners. Investors should examine companies closely before purchasing marijuana stocks. Pot stocks are getting cheaper, but valuations remain compared to traditional commodity agriculture businesses.
Unlike commodity businesses, the industry is multi-faceted and complex. These companies sell a variety of products. In fact, some of them don’t even sell marijuana. Some companies grow hemp, the male variant of the cannabis plant that only carries trace amounts of THC, for its CBD.
The Agricultural Improvement Act of 2018, aka the farm bill, legalized the sale and cultivation of hemp and CBD on the federal level. Large, interstate companies were finally able to connect their supply chains and create efficient distribution channels. Until the farm bill was passed, hemp was banned in the U.S. because it contains trace amounts of THC.
The CBD Cure-All Craze
CBD has its own mania in 2018, and the chemical became wildly popular for its supposed health benefits. Health stores today carry CBD supplements for aches, pains, and mental anguish of all varieties. Since hemp and marijuana are essentially the same plants, it’s ideal to look for companies that have revenue streams on both sides of the industry. Hemp also has a variety of industrial uses
Cannabis Stocks: Mergers, Acquisitions, and IPOs
Many on Wall Street are predicting that 2019 will be the year that many of these half-baked cannabis companies get their acts together and become mature, profitable businesses. The industry saw a significant amount of M&A activity in 2018, and the purchasing companies are looking for those investments to start paying off in 2019.
Though marijuana stock prices may have calmed since the wild volatility we saw over the summer of 2018, the stage is set for cannabis stocks to take off again in 2019. If you got left in the dust last year, don’t make the same mistake. We’ve listed 5 marijuana stocks to help you start building positions in quality companies today. Start your research with the five best cannabis stocks for growth in 2019.
Marijuana Stocks: The Verdict
Buying cannabis stocks is an uncertain venture. Most cannabis companies are still in their infancy. Since the industry is relatively new, the companies don’t have established track records like other, more traditional stocks.
Many marijuana stocks that on the rise today will go bankrupt. However, for discerning investors who can spot a good company, picking the right marijuana stock today may make you very wealthy one day. In the meantime, try not to get an ulcer. Owning these stocks can be like riding a rollercoaster.
Do you own any Marijuana Stocks? Let us know in the comments below!