Now that Canada has legalized the use of recreational weed and more than half of the United States has legalized the sale in one form or the other, stocks related to the industry have started receiving huge hype. Manufacturers from Canada are listing on big U.S exchanges while U.S producers seek listings on Canadian exchanges. After a year of lows, the industry is showing some growth due to expansion. Growing sales could not meet the expectations of investors due to concerns like oversupply and undersupply. However, analysts believe that the cannabis industry and the stocks still have the potential for growth. The question is whether there are any good pot stocks worth investing in. Let us take a look at the considerations.
Pot Stocks on U.S. Exchanges
According to February ratings on IBD for companies trading on the biggest U.S. exchanges, the stocks are Canopy Growth, Cronos Group, Aurora Cannabis, Tilray, Hexo, Aphria, Organigram and CannTrust. MarketSmith offers some ratings for U.S companies like Curaleaf and Acreage Holdings. These stocks trade in Canada and over the counter. IBD also has stocks from related industries such as Innovative Industrial Properties, a marijuana-centric real estate investment company. Another such company is a Florida-based brand Greenlane involved in distributing vape accessories across dispensaries and headshops. A company making software for weed businesses and regulatory agencies, Akerna also listed on Nasdaq last year.
Trends Influencing Cannabis Stocks
More and More Legalization
Led by Washington and Colorado, the wave of legalization in the United States has spread to several states in recent years. Moreover, Canada legalized weed completely in 2018. With each new legalization movement, marijuana stocks attained increased popularity. With more states legalizing medical or recreational cannabis or both, more and more companies will emerge to cater to the increasing supply.
Increasing Popularity of Healing Effects
In the past few years, a lot of increase is seen in the interest in holistic healing through natural alternatives. Cannabis is a big player in this trend. People are discovering new benefits of this supplement and the popularity is growing by leaps and bounds. While science and research have not yet done much to prove the effects of medical supplement, anecdotal evidence has created increased interest among groups of people looking for relief from medical conditions. With increasing research, the drug would surely rise in popularity.
The 2018 passage of Farm Bill legalized the cultivation of industrial hemp, a major source for CBD products. Before this, the drug was in a grey area with a confused state of legality. Now that the law is passed, cannabidiol products can be seen everywhere, from foods to pet treats and creams to bath bombs. An entirely new market has emerged.
Top Pot Stocks to Invest in 2020
Aphria Inc. – A Canadian company dedicated to producing recreational and medical marijuana, Aphria has recently received an investment from an institution and it will be using the funds for working capital, expansion and corporate applications.
Trulieve Cannabis Corp. – This is a holding company that indulges in the cultivation, production and distribution of medical marijuana through child companies.
iAnthus Capital Holdings Inc. – Another holding company from Canada, iAnthus is engaged in providing finance and advisory services to producers who cultivate and dispense weed.
GW Pharmaceuticals Plc. – It is based in the UK and involved in the research and development of medicines containing cannabinoids. The products offered by this biopharmaceutical company are used for treating multiple sclerosis, cancer pain and chronic pain.
The Valens Co. – Another Canadian company that specializes in the formulation and process of weed, The Valens declared last November that it has taken over a hard-cider company from Toronto. This acquisition justifies the company’s intentions to expand and achieve some milestones.
Cara Therapeutics Inc. – This is another biopharmaceutical company dedicated to research and development of medicinal products. Cara Therapeutics offers drugs aimed at treating symptoms associated with inflammation and pain.
Innovative Industrial Properties Inc. – This real-estate brand involves in owning, managing and acquiring properties. The investments comprise of properties used for the cultivation and production of medicinal supplement.
While there is some recovery in recent times, nothing can be clearly said about the long-term profits of marijuana stocks. Investors could see these stocks as other IPOs that grow at a fast pace but lose money. Currently, we can say that weed stocks may not improve until there is an indication of a boost. Regulatory clarity can also contribute to a rise in stocks.