Looking for the best cannabis stocks to invest in has become a more interesting exercise this week. This came after the Biden administration stated that they would decriminalize if they win. And unsurprisingly some of the top cannabis stocks are soaring as a result. It’s been a while since the marijuana industry has gotten this much optimism. Are we back to the good old days just yet? You see, it’s nice for the sector to have a bump. Investors are hoping that a big change in the industry could finally come to fruition in the near future.
Truth be told, that’s something U.S. pot stocks investors have been hoping for it to happen for a long time. After all, many have been holding stocks for years. As of today, cannabis is not legal at the national level. Admittedly, federal authorities appear to have generally avoided prosecuting those in states that have approved marijuana for medicinal or recreational use. Of course, Biden’s campaign is very encouraging for cannabis stock investors. But investors should note that “decriminalize” and “legalize” are not the same thing.
Regardless of whether its decriminalization or legalization, investors cheered the campaign by sending some of the top marijuana stocks higher. Shares of pretty much every cannabis stock surged. Notably, Tilray (TLRY Stock Report) and Cronos Group were both outperforming the broader industry, even the market in general, by rising 18.27% and 9.96% respectively. The stock market can be the best place to create wealth for some. And one of the most promising asymmetric opportunities can be found in the cannabis sector. Considering it is one of the fastest-growing industries across the world. With these in mind, here are three pot stocks to bet on the future of the cannabis industry.
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Shares of Canadian cannabis producer Aphria (APHA Stock Report) climbed more than 10% on Thursday, extending the week’s gains. This came as analysts were full of praises for the company ahead of its quarterly earnings release next week. If you have been following this space closely, you would know that APHA stock is one of the best performing cannabis stocks in the stock market today. Over the past 6 months, APHA stocks have climbed more than 77%. It vastly outperformed the world’s most valuable cannabis company Canopy Growth (CGC Stock Report), which has gained around 20% in the same time frame.
There are many reasons to be optimistic about APHA stock. Yes, APHA stock has outperformed the sector and has also traded in the positive territory year to date after the “decriminalization” news. But the question here is, can we expect the rally to continue? Well, I think it doesn’t take an expert to know that polls leading to the presidential election will serve as the “key indicator” for the few weeks to come. And if you are hoping for a huge jump in this space, you know what to pay attention to.
Granted, it’s not all a bed of roses. Aphria doesn’t have the strongest balance sheet in the business. Its cash of nearly CAD 500 million is not much more than its roughly CAD 400 million in debt. Of course, we are not saying that the company is weak. But Aphria doesn’t have that much spare cash that its larger rivals have. Nevertheless, at just over $5, APHA stock is certainly interesting to watch. Will you be adding Aphria to your watchlist this week?Top Cannabis Stocks To Watch For Potential Long Term Gains: Aurora Cannabis
If you are constantly looking for cheap pot stocks to buy, you would have most probably considered investing in Aurora Cannabis (ACB Stock Report). After all, it is one of the bigger names out there. Yet, the company has struggled to turn its marijuana business profitable. Like other cannabis stocks in the stock market, ACB stock surged more than 10% during Thursday’s intraday trading and is also trading higher today. Volatility is the name of the game when it comes to investing in marijuana stocks.
If you look back at the past performances of the industry, Aurora had one of the wildest rides compared to its industry peers. Aurora stocks have shed 90% of their value in the past 12 months. The company has been cutting costs by closing growing facilities and reducing staff. However, the company turned a new leaf in May after surprised investors with its third-quarter results.
It is now important for Aurora to achieve profitability. Earlier this year, the company told investors that it was going to achieve positive EBITDA by the third calendar quarter this year. That goal has since been bumped back to the second quarter. However, according to Tamy Chen from BMO Capital Markets, the company may need another 3 years to achieve the sales volume needed to hit break-even adjusted EBITDA. And that is assuming selling, general, and administrative expenses do not increase in that period.
“Because new management is trying to shift from value to more premium, we do not expect growth on a volume basis over the next 3 years until the company settles into a steady-state market share, which we define as low-to-mid-teens %… If ACB is successful in this shift, there should be revenue-dollar growth. Pending further visibility into ACB’s success in premium categories, our model currently projects modest dollar growth.”- Tammy Chen, Analyst at BMO Capital MarketsTop Cannabis Stocks To Watch For Potential Long Term Gains: Cronos Group
The year 2020 hasn’t been particularly kind to Cronos Group Inc. (CRON Stock Report). Since its peak in March 2019, CRON stock had shed more than 70% of its valuation. That’s following the “collapse” of the cannabis space. But not all hope is lost, in fact, it still has some potential catalyst in the near-term. The company intends to expand its offering to Israel. Should the company be successful in penetrating the market for medical marijuana, CRON stock is one to watch in the long run.
For now, Cronos Group must focus on the Canadian market after having received roughly $1.2 billion in cash from Altria Group Inc. (MO Stock Report) a few years ago. With that, many investors have felt comfortable with the company’s future. This is as it has enough funds to back any expansion projects it wants. But, with that being said, it’s probably not the best time to buy CRON stock due to how volatile it is. In addition, Canadian marijuana stocks have not performed too incredibly in the past few months. But, Cronos Group could have a solid long-term future in the cannabis industry.
The company has been working to produce several new products including edibles and vapes. Because it has spent so much time and money on the development of these products, the company posted a second-quarter sales number of around $10 million. In order for Cronos Group to see success, the company will have to contend with the future of the Canadian cannabis industry. If it turns out that Altria’s management influence on Cronos yields results, then Cronos stock is one attractive pot stock to buy.