The marijuana stocks are growing by leaps and bounds.
In fact, the speed and the consistency of this industry are quite phenomenal.
The legalization of marijuana is considered to be a key reason for the sudden jump.
According to some recent studies across North America, legal cannabis sales are on the rise.
In just 2016, the marijuana industry clocked 34% growth.
In 2017, the annual growth was close to 33% and generated close to $10 billion sales.
If that does not make you light-headed, it is set to grow by 26% annually through 2021.
Just from 2018 to 2021, the annual sales may grow around 28% per year
The legal marijuana sales in North America may go well above $20 billion by 2021.
What is particularly striking is the consistency of the growth.
On and off, you do find many sectors clocking such remarkable growth.
But the most striking element is the phenomenal rate at which it is continuing.
Investors mostly don’t seem to get enough of it.
No wonder, you see a wide range of investors making a beeline for this new investment avenue.
In fact, the whole perception of how you looked at marijuana went through a radical change.
The rising use of medicinal cannabis played a key role there.
However, you have to be careful while making a choice.
This is because the marijuana trade is concentrated in select regions.
In many parts of the world, dealing with them is still illegal.
While there are some areas like the United States that have legalized their trade.
So, as an investor, you have to choose the marijuana stocks carefully.
That will alone decide the extent of gains that you can clock.
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Top Marijuana Stocks
Here is the list of the marijuana stocks that you can buy and hold:
- Scotts Miracle-Gro
- Canopy Growth Corp
- AbbVie Inc
- Aurora Cannabis
- INSYS Therapeutics
- Cronos Group
This is a wonderful example of a hardcore organic play.
In fact, it is one of marijuana stocks that draws value purely from organic growth.
The most important trigger for the company is the regulatory nod for its part III expansion.
This step is set to push production up by almost 3x the current capacity.
Broad estimates peg renewed capacity to be almost 30,000 kg annually.
Its production facility now increased even further with the addition of the 200,000 square feet.
Their current cannabis output is less than 10,000 kg.
Therefore the higher sales will give marijuana stock a major edge going forward.
Moreover, the company has also struck an exclusive deal.
They will be providing medicinal cannabis exclusively to Loblaw Companies’ arm.
This arm, Shopper’s Drug Mart has close to 1300 stores across Canada
Being an exclusive marijuana supplier to them will surely add to the revenue significantly.
Legalized medicinal cannabis is currently much in demand.
Moreover, this is a space that will continue to see demand for the longer term.
That in itself provides greater insurance for long-term growth.
The first crop after the expansion will be available for sale by May 2018.
That will enable them to produce high-quality cannabis at reasonable rates.
The huge capacity neutralized the overall expenses to a large extent.
That apart it has also forged strategies tie-up with Double Diamond Farm.
They have also undertaken some amount of M&A.
Broken Coast is one of the most recent takeovers.
This Canada based company is set to gain significantly from this takeover.
It will provide a greater customer base and increase the production facility too.
So, all in all, it is among the better quality marijuana stocks to buy.
It has fundamental value embedded in the core operation module of the firm.
2. Scotts Miracle-Gro
The stocks in the marijuana space are racing ahead with full throttle.
In this situation, most investors are worried about their capital preservation.
No wonder, the relative safety that Scotts offers, makes it one of the best marijuana stocks.
If you want to limit your risk in the marijuana space, this is one of the most convenient alternatives.
Almost 90% of its revenue comes from convention lawn mowing and garden care business.
This is essentially weather dependent space and clocks average mid-single digit growth.
Only 11% of its sales are from Hawthorne Gardening.
This particular company is engaged in servicing the medicinal cannabis market.
Hawthorne specializes in plants rich in mineral nutrients.
In 2017 alone, their sales increased by over 100% to close to $290 million.
Needless to mention that profit tripled in the same period.
The company is likely to clock double-digit growth by the end of 2018.
Though marijuana manufacture is a legalized trade now, this counter provides you complete cover.
Even in case of a situation when there is a complete crackdown on marijuana, your investment is well protected.
It provides you sufficient protection in any eventuality.
The company can continue the garden business without worrying too much.
Moreover, Scotts is not a local player.
It is, in fact, a global name.
It has a presence across Canada, Mexico and has also spread wings to Europe.
The global presence can also protect investor interest.
Even if marijuana was banned in a specific market, production can shift to other markets.
The average target price estimates indicate significant upside.
It is currently around $90, but the estimates are closer to $98.
Moreover, the market is OVERWEIGHT on the stock.
The future earnings estimate also highlight the optimism associated with the stock.
The business diversification is the greatest strength.
3. Canopy Growth Corp
It will not be wrong to say that this is one of the leading marijuana stocks.
It controls nearly fifth of the entire marijuana market share including medicinal and recreational stock.
The company has latent growth potential and is quick to grab the opportunity.
It has strategically used acquisition as a channel to drive growth.
The company has constantly been adding market share through this route.
Currently, the company has seven facilities that are clocking continuous growth.
To add to this, it is further developing another 3.7 million square feet land in British Columbia.
Though the yearly production targets are not announced, experts estimate at 300,000 kg.
The analysis indicates that this can be even more.
The stake buy by Constellation Brands is expected to bring in a much-needed cash infusion.
The beer maker has acquired close to 10% stake in this marijuana company.
Needless to mention that the $190 million cash inflow further perked up sentiment.
This is expected to help the company ramp up its expansion.
Furthermore, it has also acquired Mettrum Health in 2017.
This is undeniably one of the largest takeovers in the marijuana space.
This has helped ramp up facilities as well as increase customer base.
The stock is currently trading below the 52-week high of $35.88.
On an average, analysts are OVERWEIGHT Canopy Growth.
The average volume of the stock is north of 246,000.
Though the trading interest in the stock continues, the earnings estimate going forward is muted.
That said, the company continues to be on the lookout for new acquisition targets.
It targets adding capacity and customer base simultaneously with this initiative.
With quite a few European countries reforming marijuana laws, that is seen as the next trigger.
The profits are expected to get a brand new fillip.
4. AbbVie Inc
This is amongst the key marijuana stocks that sell cannabis-based medical products.
The company has a key drug that is marijuana-based.
It is called, Marinol and is now approved by the US FDA.
This drug is particularly useful is helping chemotherapy patients deal with nausea or vomiting.
Marinol is also beneficial for AIDS patients.
What is particularly striking is this is not AbbVie’s flagship product nor the biggest seller.
The company has been clocking a steady increase in revenue.
Over the last four years, the operating income for the company also increased gradually.
This is primarily from the sale of Marinol and other popular drugs.
If you are not keen on investing in direct marijuana sticks, this is an alternative.
The advantage, in this case, is you do not have 100% exposure to a pure marijuana play.
This exposure is relatively indirect.
However, the sales for this company is primary in the United States.
They do not have a major international market foray.
This has certain ramifications on the prospects of the stock.
Supposing sales slip in the local market, it can impact the stock directly.
The company does not have any back-up.
As a result, the stock’s value can depreciate to a large extent if domestic sales suffer.
But the EPS estimates around $8.72 for 2019 indicate that the sales are likely to remain brisk.
The market capitalization of the stock is around $190 billion.
The stock is currently trading well below the 52-week high of $125.86.
But the good news is there is room for even further growth.
Most analysts peg the price target even higher, above $127 per share levels.
They are OVERWEIGHT AbbVie and expect the sales momentum to continue.
All in all, it is a reliable marijuana stock to bet on.
5. Aurora Cannabis
The Marijuana sales becoming mainstream in California is a major trigger in 2018.
The marijuana stocks are virtually on fire.
Aurora Cannabis too has joined this race.
In fact, this stock is almost neck and neck with Canopy Growth.
It is seen as a close rival for Canopy for the top spot, of course in terms of market capitalization.
However, the Aurora growth story is relatively more interesting.
For canopy growth, the triggers for expansion are predominantly inorganic.
Acquiring strategic companies and fuelling growth through it is the primary motive.
Aurora has been taking forward growth quite differently.
They have consistently combined organic growth with expansion via acquisition.
The Aurora Sky that is slated to finish by the middle of 2018 is seen as the next big trigger for the stock.
It is likely to be spread out over 800,000 square feet and is expected to be a state of art facility.
It is understood that this superior facility will also aid production.
Conservative estimates expected at least 100,000 kg marijuana on a yearly basis.
The company is also in the process of an acquisition to aid expansion.
Sources indicate that it put in a hostile bid for CanniMed Therapeutics.
If the bid actually goes through, their production will receive another fillip.
It may become as high as 130,000 kg a year.
Another factor that is sure to help the stock is the exclusive deals it has struck.
All in all, the stock is currently well below the 52-week high levels above $12 a share.
That means you can expect a significant jump in overall share prices.
There is sufficient traction in the overall share performance.
The average price target is above $12.
Most analysts are OVERWEIGHT on Aurora Cannabis.
That said, the stock displays continuous growth prospects going forward.
6. INSYS Therapeutics
This again is not a direct marijuana play.
This pharmaceutical company makes several non-cannabis drugs too.
But the latest marijuana based innovation is said to provide a major fillip.
It will be used for epilepsy in children.
They are also working in a unique way to deliver marijuana-based drug formulation.
But as a result of all these formulations, it has incurred significant expense in research.
That has become a point of worry among its clients.
As a result of it, you saw significant value erosion.
The stock price slipped to a large extent.
After a continuous spell of sharp losses, the share price broke out in December 2017.
Though it is a volatile counter, it is a dependable marijuana play.
It is one of those marijuana stocks that help you avoid a direct exposure.
That means it also safeguards you from the relative risk.
In case, there is any crack down on Marijuana, these type of stocks offer reasonable cushion.
They also have other non-marijuana based offerings.
As a result, they have opportunities for clocking reasonable sale without marijuana-based products too.
That is a very advantageous proposition.
It helps you create greater value in your existing portfolio.
That apart, the fundamentals also makes it one of the most profitable marijuana stocks.
The market capitalization is well over $525 million.
The stock price is trading well below the 52-week high.
That means, even on its own, the room for upside is pretty significant.
This is one of those marijuana stocks that also indicate a promising future.
If you check the 2019 earnings estimates, it still shows signs of recouping.
Moreover, the stock price went down so badly, that investors are booking profit at every gain.
This has also limited the relative gains thus far after December breakout.
7. Cronos Group
This Toronto based firm is a relatively new addition to the Nasdaq
This stock entered Nasdaq in February 2018.
It is a direct marijuana play.
It specializes in the production of medicinal marijuana and its distribution.
Its markets include Canada, Germany, Israel and even extends to Australia.
The stock surged almost 205 after it moved from the OTC segment.
However, the challenge is the legal status of marijuana in many countries globally.
The market is rather buoyant about the legalization in California.
But let us face it Cronos is a pure marijuana play.
This makes the stock extremely vulnerable to regulatory tightening anywhere globally.
The stock has an active distribution network globally.
This means any potential tightening anywhere else can severely impact the stock.
Even for the Cronos group investors, this is a major risk.
However, this is a risk in most direct marijuana stocks.
But the encouraging news is as of now the markets are favorable.
The stock price is also reflecting the changed sentiment.
So you can easily take a position in this stock for the short-term.
However, you have to be alert about booking profit at the right time.
The smallest of miscalculations can result in deep losses.
Marijuana Stocks Are the Flavor of the Moment
In fact, they represent value in both direct and indirect form.
The legalization of marijuana in California and many parts of Europe is the primary trigger.
This is what has kept the sentiment buoyant.
Though demand for the marijuana stocks remains firm, the earnings for many is worrying.
Especially a lot of the firms signal a slowdown in the earnings projection going forward.
Therefore, as an investor, you have to be careful about the stocks that you choose.
It is best to go for a combination of direct and indirect marijuana stocks.
This will then cushion your portfolio against regulatory action on direct marijuana stocks.