Are These The Best Cannabis Stocks To Invest In 2020?
As the US and Canada work to get their cannabis industries back on track, several cannabis stocks are poised for a potential rebound. It is during the coronavirus pandemic that we have seen demand continue to go up in the face of adversity. Since the reverse stock split of Aurora Cannabis (ACB Stock Report), there has been a lot of hype surrounding the company these days after it reported an improved quarter last month.
We have seen some positive sentiments surrounding marijuana stocks in recent weeks. The outlook is looking better now than it was just a few months ago, as lockdowns have ended. 2019 was not the year for the cannabis industry as many pot companies saw their valuations wiped out. Just last month, Canopy Growth (CGC Stock Report) badly missed analyst’s top and bottom-line estimates. Its sales fell 13% from the prior quarter. Nearly everything that could go wrong for Canopy went wrong in its latest quarter. But Canopy nonetheless remains in a strong position in the cannabis industry. That’s thanks to the major investment from Constellation Brands (STZ Stock Report).
Given the uncertain future, stock selection is critical in the marijuana space. Investors should take note of the financials and business models of cannabis stocks as the industry moves into the future. For this reason, here are 3 top cannabis stocks to watch in 2020.
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Top Cannabis Stocks To Watch In 2020: Cresco Labs
First, up the list, Cresco Labs (CRLBF Stock Report) is a major player in the US cannabis space. While most cannabis investors have been focusing on Canada, there’s no doubt that the US has become and will remain the leading cannabis market in the world, by total sales. If you are an avid pot stock investor who follows the smell of money, it makes perfect sense to focus on the cannabis stock that is currently dominating the US marijuana market.
What really caught my attention in Cresco Lab’s future growth prospect is when it acquired Origin House. Origin House, previously known as CannaRoyalty, is a leading distributor of cannabis products in California and markets several of its own cannabis brands. Through this acquisition, Cresco Labs instantly gained access to more than 575 licensed Californian dispensaries with which to market its products. With California being the largest marijuana market in the world by annual sales, the Golden State is Cresco’s ticket to $1 billion in annual revenue. For this reason, would it be safe to say that CRLBF stock is one of the top marijuana stocks to watch?
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Top Cannabis Stocks To Watch In 2020: GW Pharmaceuticals
GW Pharmaceuticals (GWPH Stock Report) suffered with its industry peers in the 2019 sell-off. But the recent surge in pot sales brought the company back to life. The company is the maker of Epidiolex, a prescription drug containing cannabidiol for the treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome.
Bank of America analyst Tazeen Ahmad says Epidiolex uptake has been “robust,” and its recent descheduling by the U.S. Drug Enforcement Administration has cleared a path for more prescriptions. Epidiolex is under review for label expansion to treat tuberous sclerosis complex, and Ahmad estimates that approval could come by the end of July.
From the company’s latest fiscal report, the revenue was up threefold to $120.6 million from $39.2 million a year ago. The solid revenue can be attributed to the massive success of Epidiolex global sales, demonstrating the brand’s large consumer base. GWPH stock has climbed more than 70% from its march low and the trend is likely to continue.
Top Cannabis Stocks To Watch In 2020: Green Thumb Industries
Last on the list, Green Thumb Industries (GTBIF Stock Report) has been experiencing a tough year too. The stock plummeted nearly 60% during the March sell-off and is currently near 9% up year to date. From its low in March, shares of Green Thumb have surged more than 150%. They are currently trading at $10.28 per share.
Green Thumbs currently has 44 retail outlets spread across 12 states with licenses for 96 stores. The company reported first-quarter revenue of $102.6 million, compared with $27.9 million in the same quarter last year.
“We have expanded our service model to include curbside pickup, and we have bolstered our delivery infrastructure in Nevada so that we can continue to serve the community with much-needed access to quality cannabis,” Ben Kovler- CEO of Green Thumbs Industries
That said, shares of many cannabis stocks have fallen off a cliff, with some completely vanished from the market. The companies that are likely to survive the pandemic are those that have strong cash positions on their balance sheet. This will allow these cannabis companies to get through any short term hurdles.