As part of a newly emerging industry, it is very easy to see the allure of cannabis stocks. With most of the market trading near record highs, the cannabis industry continues to show signs of elevated growth over the long-term time horizon. But it is also easy for investors to get sucked into the hype, and make a bad decision which can lead to problematic investment results.
For these reasons, it is important to identify companies which have true staying power and are positioned to capitalize on the industry’s underlying growth prospects in the years ahead. These three stocks selected below are well-positioned to capitalize on these bullish market trends well into the future.
In many ways, Canopy Growth Corp. (NYSE:CGC) is the king of the cannabis industry. The company has a market cap of $8.25 billion and licensed production facilities in most of Canada’s provinces (at 70%). Canopy has quickly risen to prominence due to its presence in global cannabis markets and in its production capacity. Canada recently legalized marijuana for recreational use, and Canopy is currently developing 3.2 million square feet of growing space to meet the rising consumer need for these products.
Canopy also has supply agreements with many large third-party growers, and this should continue to help the company expand its footprint relative to the more minor growers. The stock has taken-off like a rocket since the middle of 2017, but Canopy’s relative position in the industry suggests that this is only the beginning for CGC.
Marijuana grower Cronos Group, Inc. (NASDAQ:CRON) is another name to watch, as the company is already well-positioned in key regional markets. The stock has rallied by a massive 3,860% over the last three years, and recent successes in its distribution outlets suggest that the stock still has much farther to run.
Cronos Group currently has a market cap of $1.48 billion, but this could change if we see positively surprises in the next set of earnings reports coming from the company. Toward the end of November, Cronos is scheduled to report earnings with large revenue expansion and net sales projections of $11.29 million. If realized, this would represent a gain of 975.25% relative to the same period last year. These are truly incredible numbers, and this ultimately suggests that CRON will not be giving back many of its gains in share prices any time soon.
The last name on our list is GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH), which is actually a UK pharmaceutical company which has developed a multiple sclerosis treatment (called nabiximols). Nabiximols was highly innovative as the first derivative of the cannabis plant which gained government approval (in any country).
As a true innovator, GW Pharmaceuticals is positioned to lead the way in cannabis application treatments, and this gives the company a leg-up relative to the simpler growing companies. GW Pharmaceuticals currently has a market cap of $4.05 billion, but the long-term trend in share prices suggest this number is set to rise over the long-term.
Disclaimer: The author and Spotlight Growth has no positions in any of the stocks mentioned in this article. Nor does either party currently have any relationship, or any other conflicts of interest, with any of the companies mentioned in this article. This content is meant for informational and entertainment purposes only and should not be meant as a recommendation to buy or sell any securities. Please visit a licensed financial representative to determine what investments are right for you.
Article By: Ric Cox