Top Pot Stocks in 2019
This year has been a strong one so far for marijuana stocks, but not all of them are created equal. Some are certainly better than others, both in the short term and projecting ahead. With that in mind, let’s look at two high-potential pot stocks.
Remember, with marijuana penny stocks, there’s always risk involved. Being smaller, they tend to have higher volatility. But with risk comes the possibility for reward and, as you’ll see below, these stocks have been rewarding investors for a long time now.
High-Potential Pot Stocks
A preface to this section: I wouldn’t necessarily describe these as the outright “best” marijuana stocks.
For instance, Canopy Growth Corp (NYSE:CGC) would be among my top picks for long-term buy-and-hold strategies. That’s mainly due to the company’s impressive fundamentals and powerful size.
The difference between CGC stock and the two stocks discussed below is that those two have higher potential than CGC. That is to say, while Canopy Growth stock is still likely to see big gains down the road, the other two stocks have a higher ceiling, albeit with more risk.
With that out of the way, let’s take a look at my two picks for the biggest gains in 2019.
Chart courtesy of StockCharts.com
Marijuana Penny Stock #1: HEXO Stock
I’ve been on the Hexo Corp (NYSEAMERICAN:HEXO) bandwagon for a long time now. And that ride has paid off handsomely; this year alone, HEXO stock has nearly doubled in value.
The company has long been on my radar for one key reason: its stock price. HEXO trades around $7.00 per share, but it has the potential to easily climb much higher. Combine that with a relatively small market cap at less than $1.4 billion and you have room for much higher growth.
After all, HEXO shares have only begun to see gains. Whereas many marijuana stocks (Canopy Growth stock included) saw thousands of percentage points in growth over the past few years, HEXO stock has only seen increases of a few hundred percentages.
Now, obviously, most investors would be thrilled to see triple-digit returns on a yearly basis, but this is the marijuana market—that’s a paltry sum relative to some of its competition.
As such, there’s still a lot of opportunity for growth left in HEXO stock’s future, and that’s because, while it has a marijuana penny stock price, the company has a marijuana titan profile.
Hexo Corp scored a partnership with “Big Alcohol” via Molson Coors Brewing Co (NYSE:TAP). It also has a killer supply agreement with Quebec—one of Canada’s largest provinces—for the next five years.
Hexo’s management has been making savvy business decisions such as strong acquisitions, the most recent one being Newstrike Brands Ltd (OTCMKTS:NWKRF, CVE:HIP). The deal will see Hexo Corp’s production capacity expand while putting the company firmly in eight Canadian provinces. (Source: “HEXO Corp to acquire Newstrike Brands Ltd.,” Globe Newswire, March 13, 2019.)
And Hexo’s numbers have been great.
Its gross revenue in the last quarter increased 1,269% versus the same prior-year period and 144% versus the previous quarter. The company produced 4,938 kilograms (about 10,886 pounds) of dried cannabis in the quarter, an increase of 39% over the previous quarter. Of that, 2,689 kilograms (about 5,928 pounds) was sold in the quarter, an increase of 142% from the company’s last financial report.
“This is an exciting time for HEXO as we continue to achieve milestones on the way to becoming a top two cannabis company,” said Hexo CEO Sebastien St-Louis. (Source: “HEXO reports over $16.2 million in total gross revenue in the second quarter of fiscal 2019,” Globe Newswire, March 14, 2019.)
All things considered, it’s a good time to be an owner of HEXO stock. I could see the price easily ballooning to $20.00 at some point in 2020.
Marijuana Penny Stock #2: OGRMF Stock
Another high-potential marijuana stock is OrganiGram Holdings Inc (OTCMKTS:OGRMF, CVE:OGI).
Unlike HEXO, which I believe to be an undervalued industry titan masquerading as a marijuana penny stock, OrganiGram is a much more traditional low-price stock.
The company has under $1.0 billion in market cap and doesn’t have a listing on a major U.S. exchange yet . That is increasingly rare among the top pot stocks, and OGRMF stock is sitting firmly on that threshold.
Unlike Hexo Corp, which already has a ton of achievements under its belt, OrganiGram stock is attractive to me for precisely the opposite reason: the company still has so much yet to achieve. OrganiGram is on the cusp of becoming an industry powerhouse, which could mean that now is the best time for investors to seek out gains.
Getting a U.S. listing, a major partnership, or even becoming an acquisition target are all very real possibilities in the company’s future, and would send its share price soaring.
OGRMF stock has already doubled in 2019 and I see no reason why those gains will slow, mainly because of the company’s stellar financials.
OrganiGram Holdings Inc’s net sales for the last quarter hit CA$12.4 million, up from CA$2.4 million in the same prior-year period and up from CA$3.2 million in Q4 2018. That represents 419% and 287% jumps, respectively. (Source: “OrganiGram Reports Record Net Revenue of $12.4 Million Up 287% Sequentially Quarter-over-Quarter; Adjusted Gross Margin of 71%,” OrganiGram Holdings Inc, January 28, 2019.)
Net income similarly grew, hitting CA$29.5 million (CA$0.195 per diluted share). This is a stark contrast to its net loss of CA$1.2 million ($0.012 per diluted share) in the previous year.
These were among the best numbers to come out of the cannabis industry post-legalization, and the company’s earnings report netted OGRMF stock a healthy boost to its share price. Better yet, OrganiGram wrote in its report that it fully expects in Q2 2019 to at least double the net revenue of its first quarter.
Trading around $7.00, OGRMF could eclipse $20.00 in 2020, and I doubt that we’ve seen the end of its gains in 2019.
There is no shortage of high-potential pot stocks to watch in 2019. But while many pot stocks have registered strong performances this year, some of them have seen their best days behind them. After all, it’s hard to compare a mature company’s growth scale to a company that’s still in its early days in a nascent, highly volatile industry.
With Hexo Corp and OrganiGram Holdings Inc, you have two marijuana penny stocks for which I believe the best is yet to come. Both of these companies are high on potential and fundamentals, a potent combination that is an investor’s dream.