[Editor’s note: This story was originally published May 2018. It has since been republished and updated to include the most relevant information available. At least one stock has been removed from this list.]
Last year witnessed several catalysts for the legal cannabis industry, most notably the legalization of recreational marijuana in Canada. As a result, several marijuana stocks jumped substantially in market value due to the open-ended potential. Essentially, we’re talking about an industry that practically didn’t exist before, at least from a government tax revenue perspective.
But once legalization became a reality for our northern neighbors, the mundane aspects of the cannabis business imposed themselves. With the honeymoon phase over, investors wanted to see hard numbers. After supply and distribution issues caused high prices and low inventory, financial backers were less than impressed. As a result, marijuana stocks suffered steep declines.
Unfortunately, the sector is still drowning in a sea of red ink. Throughout the summer, U.S. investors hoped that cannabis firms would work through their growing pains quickly. Unfortunately, that didn’t happen. Several top names produced poor earnings reports, leading to a continued erosion in marijuana stocks.
Recently, the vaping crisis has made matters worse for marijuana stocks, at least from an optics perspective. Why? Because most of the illnesses involve the illegal vaping of THC-based liquids. As such, vaporizer companies are seeking to direct the heat somewhere else besides their core industry.
Nevertheless, despite the myriad headwinds, I believe marijuana stocks offer a compelling opportunity. One of the biggest reasons is that we honestly don’t know where this sector can go: While it could fall flat on its face, it very well could spark a paradigm shift.
Plus, during an economically sensitive time, we need more business growth, not less. That plays favorably into the hands of these 30 marijuana stocks to buy.
Marijuana Stocks to Buy: Cronos Group (CRON)
With marijuana stocks still jostling for position in the early phase of the game, we’ve seen several shifts. In this open-ended arena, Cronos Group (NASDAQ:CRON) has emerged as the unofficial leader of the pack. Thanks to strong backing from tobacco giant Altria (NYSE:MO), CRON stock has benefited from key acquisitions.
That said, it’s been a rough ride for cannabis players. Dethroned from their status as stocks to buy, Cronos and its peers have wilted this year from higher expectations. For example, the company knocked out a revenue and earnings beat for its second-quarter earnings report. This also included 1,584 kilograms of cannabis sold, up 232% from the year-ago quarter. Yet CRON stock tumbled on the positive news.
I’m not trying to dismiss the challenges. But over the long run, CRON stock appears a solid buy. For example, the company’s Redwood Holding Group acquisition gives it exposure to the U.S. CBD market via Redwood’s Lord Jones brand. Thus, with shares down 52% since the end of February, speculators should consider adding some positions on the cheap.
Aurora Cannabis (ACB)
Roughly one year ago, Aurora Cannabis (NYSE:ACB) was streaking toward the heavens. At the time, enthusiasm among marijuana stocks to buy was strong due in part to the “newness” factor.
Quite simply, we’ve never witnessed an illegal market suddenly enter the mainstream with robust public support. Combined with Aurora’s focus on the far less controversial medical-cannabis business, ACB stock seemed like a lock.
Over the last several months, shares have briefly popped higher, demonstrating its true potential. At the same time, ACB stock has been vulnerable to severe drops. A significant catalyst for these declines is shifting expectations.
Especially in the second half of this year, Wall Street wanted hard numbers, not narratives. Unable to satisfactorily deliver the goods, Aurora shares have plummeted along with most other marijuana stocks.
Still, Aurora Cannabis has the largest international footprint among Canadian marijuana stocks to buy. If U.S. legalization doesn’t quite happen, management has a viable back up plan. That’s because global weed use has grown 60% over the past decade, putting ACB in prime position.
Canopy Growth (CGC)
Canopy Growth (NYSE:CGC) is a perfect example of the prior hype — and the present reality — of marijuana stocks to buy. Before the volatility hemorrhaged this sector, CGC stock was one of Wall Street’s darlings. With an aggressive expansionary strategy, Canopy appeared poised to go places.
It also didn’t hurt that alcoholic beverages giant Constellation Brands (NYSE:STZ) acquired nearly a 40% stake in CGC stock. Naturally, the cash influx helped Canopy’s balance sheet, giving it the confidence to expand.
However, CGC stock recently took a dive in the markets following an analyst warning. According to the report, Canopy is burning through cash “at an alarming rate.” As many of my InvestorPlace colleagues have pointed out, sustaining the expansion strategy would dangerously dilute shares. Clearly, this is a risk factor that anybody should carefully consider.
At the same time, this is the unfortunate practice that cannabis firms must do to position themselves for tomorrow. In that way, it’s similar to technology firms that absorb huge profitability penalties in the present to gain a market share foothold. Deciding if you believe the narrative is both the danger and the allure of CGC stock.
Touching $300 on an intra-day basis shortly after its initial public offering, Tilray (NASDAQ:TLRY) has certainly forwarded some impressive stats. Of course, winning in the markets is more than just posting one-off pretty numbers. And for TLRY stock, the journey has been decidedly negative since touching that psychologically significant benchmark.
As such, Tilray is among the worst-performing marijuana stocks. On a year-to-date basis, TLRY stock is down more than 75%. Similar to a wide swath of cannabis players, Tilray has failed to impress market observers with its fiscal performance. For example, top-line sales growth is somewhat modest for a growth-centric medical marijuana company. Moreover, its income losses continue to widen.
So, is there hope for TLRY stock? It’s a long shot, but there is a believable case. With international interest for medical cannabis rising, it could provide Tilray a pathway to recovery. As I noted earlier, even conservative Japan seems open to the idea of botanical therapies.
If you’re risk tolerant, you probably don’t want to remove TLRY from your list of marijuana stocks to buy just yet.
Out of the major marijuana stocks to buy, Aphria (NYSE:APHA) is a truly interesting name. A year ago, Aphria found itself in hot water after a damning short-seller’s report. It accused the company of shady dealings, acquiring assets that largely benefited corporate insiders as opposed to shareholders. Not surprisingly, APHA stock tumbled on the news.
Further, the controversy resulted in severe consequences. Part of these consequences involved the ousting of former Aphria CEO Vic Neufeld and co-founder Cole Cacciavillani. And outside of a temporary spike rally early this year, APHA stock has traded in a frustratingly sideways trend channel.
However, an intriguing point is that Hain Celestial’s (NASDAQ:HAIN) Irwin Simon stepped in as interim CEO, eventually taking over the job full time. For someone with such a strong professional repertoire as Simon, he’s taking a big risk with APHA stock.
Moreover, InvestorPlace’s Chris Markoch made the case that APHA stock could become a buyout target. As Markoch points out, Aphria is a profitable company, which is a rarity among marijuana stocks to buy. While still risky, I think there’s enough reward potential here to make APHA worthwhile.
GW Pharmaceuticals (GWPH)
I might get in trouble for listing GW Pharmaceuticals (NASDAQ:GWPH) among marijuana stocks to buy.
At the recent Morgan Stanley Global Healthcare Conference, GW Pharmaceuticals CEO Justin Gover expressed his frustration over being mixed up with the pure weed crowd. In his view, GWPH stock is a biotech investment.And maybe that’s the case. However, GW’s flagship drug, Epidiolex, is a cannabis-derived therapy for treating seizures.
Thus, I’m sorry to say, but Gover’s protests sound like a pop star complaining about singing the same song repeatedly. Just give the audience what they want and collect your millions. Also, there’s no such thing as bad publicity.
Enough of my rant. A substantial tailwind underlining GWPH stock is the opioid crisis. Opening the eyes of millions of Americans, the raging controversy demonstrated that even well-meaning traditional pharmaceutical companies can distribute therapies that render startling consequences.
As a largely natural treatment, Epidiolex shows great promise, especially in this environment. Therefore, I’d keep GWPH stock in your shortlist of cannabis stocks to buy, even if that descriptor frustrates the CEO.
Curaleaf Holdings (CURLF)
It doesn’t take much analysis to realize that the cannabis stocks to buy from last year really didn’t pan out this year. Unfortunately, with the sector losing fiscal credibility, the Street demanded firm results. When most companies couldn’t deliver, the entire market sub-segment suffered. That said, Curaleaf Holdings (OTCMKTS:CURLF) and CURLF stock are moving against the grain.
If you look at the charts for the prior marijuana stocks on this list, you’ll see prominent bearish trend channels. But with CURLF stock, shares have gone sideways since July. Also, since the last trading…