Top Marijuana Stocks To Buy
In the U.S. today, 46 states have adopted partial or total legalization of cannabis or related products. Increasing acceptance of marijuana among American consumers and their elected representatives could make this edgy asset class a potential source of growth for your portfolio.
top marijuana stocks to buy
Aurora Cannabis is a Canadian LP with the top share of the Canadian medical marijuana market. Aurora management has said the company should finally be profitable on an earnings before interest, taxes, depreciation and amortization (EBITDA) basis as it exits the December quarter.
Unlike the U.S. and Canadian stocks on this list, Clever Leaves is a large global cannabis producer headquartered in Colombia with cultivation and extraction operations in Colombia, cultivation facilities in Portugal and a distribution network in Europe.
The stocks highlighted on this list are sourced from industry analysts, but they may not be a perfect fit for your portfolio. Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance.
However, the first wave of U.S.-listed cannabis stocks has been something of a disappointment. Shares of high-growth, multi-state operators (MSOs) have slumped in 2023 as cannabis producers face pricing pressures in a fiercely competitive U.S. market.
In U.S. states with mature marijuana markets, like California and Colorado, prices have fallen significantly. The price of most cannabis categories are near record lows in Colorado, with the price of flower down 50% and the price of trim down 41% year-over-year.
Wayne Duggan is a Forbes Advisor contributor. He is also a staff writer at Benzinga, where he has reported on breaking financial market news and analyst commentary related to popular stocks since 2014. Mr. Duggan is also the author of the book "Beating Wall Street With Common Sense" and has contributed news and analysis to U.S. News & World Report, Seeking Alpha, InvestorPlace.com and The Motley Fool. Mr. Duggan is a graduate of the Massachusetts Institute of Technology and resides in Biloxi, Mississippi.
Marijuana stocks have given cannabis investors nothing but false starts over the past few years. Most recently, there were a plethora of issues facing the industry throughout 2022, including inflation, overproduction, lack of capital, job losses and cratering stock prices.
The long-term prognosis for the cannabis industry is good. Ultimately, the following nine picks look like the best marijuana stocks (and funds) to benefit from this ongoing growth and maturation.
On the consumer side of cannabis, it has a $150 million six-year convertible note in RIV Capital (CNPOF (opens in new tab)), which represents a 42% stake. In March 2022, RIV Capital acquired Etain Health (opens in new tab), one of New York state's original medical marijuana producers, for $247 million. Etain has one of 10 vertically integrated licenses from the state.
Still, IIPR remains one the best REITs on Wall Street, as well as one of the best marijuana stocks, according to analysts. Piper Sandler analyst Alexander Goldfarb has an Overweight rating (the equivalent of Buy) on IIPR, with a $140 target price, some 55% higher than current levels.
If you're looking for a pure-play cannabis company in the U.S., Massachusetts-based Curaleaf Holdings (CURLF (opens in new tab), $3.82) is one way to go. The firm got its start in New Jersey in 2010, developing one of the first vaporizers to administer a single measured medical marijuana dose.
A total of 39 states, as well as Washington, D.C., have legalized medical marijuana. Twenty-one states and D.C. have legalized adult-use cannabis. As more states legalize recreational weed, Curaleaf should be able to continue to grow its business organically and through acquisitions.
Cresco is one of Wall Street's favorite marijuana stocks. Of the 19 analysts following the stock, 13 give it a Strong Buy, three say it's a Buy, and three have it at Hold. Plus, the average target price of $6.88 implies the stock will more than triple over the next 12 months or so.
Not forgetting that this is an article about the best marijuana stocks, British American Tobacco invested an additional $5.1 million last March in Canadian cannabis producer OrganiGram Holdings (OGI (opens in new tab)), bringing its stake in the company to 19.5%. The two continue to collaborate on new cannabis-related products.
By comparison, the MJ ETF follows the performance of the Prime Alternative Harvest Index, which in addition to tracking cannabis stocks, also includes cigarette manufacturers such as Altria (MO (opens in new tab)) and a 20.1% weighting in the ETFMG U.S. Alternative Harvest ETF (MJUS (opens in new tab)). As a result of the ETF weighting, the Canadian content in MJ is slightly less than 42%.
But while 2023 might not be a year to buy in expectation of rapid gains, this could be a great entry point for purchasing some solid cannabis stocks at a discount and holding them in anticipation of eventual federal legalization in the U.S., the world's biggest pot market.
Like many firms in other industries, cannabis companies have been struggling with high inflation adding to their costs. But marijuana companies also face a host of headwinds unique to them, including competition from the illegal market and falling prices for marijuana because of competition and oversupply.
In Canada, despite federal legality, the industry has been weighed down by high taxes. In the U.S., where the drug remains federally illegal, taxes are also high, and the industry faces onerous hurdles to financing from banks. Because of federal illegality in the U.S., plant-touching companies can't list on major exchanges, and many institutional investors don't want to buy shares of companies trading over the counter, limiting marijuana firms' ability to raise money.
"From a stock perspective, the marijuana industry has not experienced the same bounce back that other beaten-down sectors have experienced since the market's bottom in October," said Tom Bruni, senior writer for The Daily Rip & Markets newsletter at Stocktwits. "Part of that is because, from a regulatory or business standpoint, there have yet to be any significant catalysts to spark a renewed interest in the space."
A silver lining for operators in mature markets facing slowing sales growth is that falling marijuana prices because of competition and oversupply should help the legal market compete with the illicit one, according to Jason Wilson, cannabis research and banking expert at ETF Managers Group. While that might not move the needle for share prices in 2023, it should be beneficial in the longer term, he said.
On the StockTwits platform, there are only two pot stocks held by popular exchange-traded fund ETFMG Alternative Harvest ETF (MJ) that have a bullish sentiment reading: SNDL Inc. (SNDL) and Cronos, according to Bruni.
If you thought last year was difficult for the broad-market stock indexes, take a closer look at how marijuana stocks fared. The vast majority of publicly traded pot stocks lost more than half of their value in 2022 as high inflation, growing competition, and a lack of cannabis reform on Capitol Hill weighed on the industry.
But a big down year for weed stocks may be the green light investors have been waiting for. Research firm BDSA is still estimating that global cannabis sales will nearly double from $30 billion in 2021 to $57 billion by 2026, with the U.S. accounting for roughly three-quarters of this $57 billion. With consumers treating cannabis as a nondiscretionary good and buying pot products even in the face of high inflation and a weaker economic outlook, it could be a smart industry to invest in during the ongoing bear market.
The first cannabis stock that stands out as a surefire buy in the new year is marijuana-focused real estate investment trust (REIT) Innovative Industrial Properties (NYSE: IIPR), or IIP for short.
REITs are businesses that purchase property, which is then leased for extended periods. In IIP's case, it's looking to buy medical marijuana cultivation and processing facilities and reap the long-term reward of rental income. As of the end of September, the company owned 111 properties covering 8.7 million square feet of rentable space in 19 legalized states.
IIP is also one of the few cannabis stocks benefiting from the lack of progress reforming federal marijuana laws. The company's sale-leaseback program seeks to acquire facilities with cash and immediately leases the property back to the seller. These sale-leaseback agreements put cash into the hands of multistate operators (MSOs) that might otherwise have limited access to basic banking services. In return, IIP lands long-term tenants.
The third marijuana stock that represents a phenomenal buy in 2023 is U.S. MSO Trulieve Cannabis (OTC: TCNNF). Although Trulieve's bottom line has recently been hurt by a number of one-time expenses related to acquisitions and the closure of redundant assets, this temporary weakness has provided the ideal opportunity for investors to pounce.
While most MSOs have been setting up shop in as many large-dollar marijuana markets as possible, Trulieve Cannabis spent almost all of its energy prior to mid-2021 building up a presence in medical marijuana-legal Florida. The interesting thing about Florida's cannabis market is that while fewer than two dozen retail licenses have been issued, license holders are free to open an unlimited number of dispensaries. Trulieve accounts for 122 of the Sunshine State's 493 operating dispensaries.
The advantage of completely saturating one of the top-dollar marijuana markets in the U.S. is simple: strong branding and customer awareness. With Trulieve stores spread throughout Florida, marketing expenses have been kept relatively low, which has helped the company produce 19 consecutive quarters (three months shy of five years) of adjusted profits. 041b061a72