It hasn’t been easy to be bullish on marijuana stocks in the last few years. After hitting the market with their own bubble in 2018, pot stocks have had a rough go of it. But that looks to be changing. And it could be medical marijuana that is leading the way…
According to the firm Data Bridge Market Research, the compound annual growth rate (CAGR) of the global medical marijuana market is projected to be 20.25% through 2027. That would value the market at approximately $82 billion in six years. And it would also outpace the CAGR of the total marijuana market which Grand View Research has at 14.3% through 2028.
There are several reasons for this anticipated growth. First, we have an aging population that is looking for alternatives to traditional pain relief solutions. Second, in addition to pain relief, marijuana is most commonly used for conditions such as anxiety and depression which are conditions widespread throughout demographic categories. Yet another reason is that states are trying to repair budget caps and need the revenue that cannabis can deliver.
And just like the recreational market, it’s likely to be the United States leading this charge. Even before President Joe Biden’s Administration got cannabis bulls fired up over the prospect of legalizing marijuana, a majority of the United States had already legalized marijuana for medical use. Today that number stands at 35 states.
Cannabis is still a volatile sector. Only you can decide the right time to enter a position or add to an existing one. However here are seven medical marijuana stocks that you should have on your watch list.
- Canopy Growth (NASDAQ:CGC)
- Hexo (NYSE:HEXO)
- GW Pharmaceuticals (NASDAQ:GWPH)
- Cronos (NASDAQ:CRON)
- Cresco Labs (OTCMKTS:CRLBF)
- Curaleaf (OTCMKTS:CURLF)
- Innovative Industrial Properties (NYSE:IIPR)
Marijuana Stocks: Canopy Growth (CGC)
When it comes to marijuana stocks, you have to include Canopy Growth on the list. In fact, it’s fair to start with Canopy. With a market cap of around $10 billion, the company is the largest cannabis company in the world. Although Canopy has only posted one profitable quarter, it is beginning to see revenue gains, largely in its home country of Canada. In fact, in its most recent quarter, Canopy posted record revenue of $153 million.
Canopy also distributes medical marijuana internationally, including Germany, which is another large market. However, the company will have the best opportunity to deliver at the scale that is needed once the United States is fully open for business. The $4 billion reason for that optimism centers around the investment made by Constellation Brands (NYSE:STZ). Constellation is working with Canopy to help develop a line of cannabis-infused beverages. However, this will also give Canopy a toe-hold in the United States.
CGC stock is up 82% in the last 12 months, but is only up 7% in 2021.
Hexo is another of the medical marijuana stocks that tried to benefit from the infused beverage market. However, Hexo’s relationship with Molson Coors (NYSE:TAP) didn’t go as planned. But Hexo is taking another bite at the acquisition apple. This time the target is Zenabis Global (OTCMKTS:ZBISF), which Hexo is acquiring for $186 million.
This is par for the course as the cannabis sector enters into the consolidation phase of its business cycle. With this acquisition, Hexo is making a strong case that it’s here for the long haul. Hexo is not one of the largest cannabis companies. In fact, analysts predict a 2021 revenue increase of around 25%.
However, analysts are more impressed by the company’s diversified product line, which will be enhanced with the Zenabis acquisition. And Hexo’s home province of Quebec is Ontario’s largest (by population). While Quebec experiences significant difficulties getting up and running, Hexo is positioned to be a big winner as conditions improve.
HEXO stock is up 168% in the past 12 months and has surged 43% so far in 2021.
GW Pharmaceuticals (GWPH)
GW Pharmaceuticals has the feel of a biotech more than a cannabis company. The company’s most recognizable product, and its highest revenue generator, is Epidiolex a CBD drug that is approved for use in the United States and Europe.
The good news is that in 2020, Epidiolex delivered a 70% year-over-year revenue gain, accounting for $510.5 million in sales. The bad news is that Epidiolex made up all but approximately $17 million of the company’s revenue for the year.
That would be reason enough to include GWPH stock on this list. But since the announcement that it will be acquired by Jazz Pharmaceuticals (NASDAQ:JAZZ), the stock has soared even higher. With a price as of this writing about…
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