Should You Consider Marijuana Stocks for 2019?
The Canada marijuana legalization experiment is now fully underway, with the drug now officially available across the country. This is leaving many investors asking if they are too late to the party. In other words, has the marijuana industry already seen its biggest gains come and go?
Fortunately for both long-term investors and those interested in entering the marijuana stock market, that is far from the truth.
The global marijuana industry is just beginning to open up. Canada is the first G7 country to legalize the drug federally, but many more are likely to follow suit in the near future.
Considering how much growth Canada—a relatively small market—was able to generate in the marijuana industry, expect larger economies to have even bigger impacts on the future of marijuana stocks.
As such, the top marijuana stocks are still ripe with potential to see enormous gains in the years to come.
With that in mind, let’s talk about three specific stocks that any marijuana investor ought to keep an eye on.
CGC, ACBFF, and HEXO Stock Chart
Canopy Growth Corp (NYSE:CGC) stock (black line), Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB) stock (blue line) and Hexo Corp (OTCMKTS:HYYDF, TSE:HEXO) stock (red line) are featured in the below chart, tracking their performance for the past three months.
Chart courtesy of StockCharts.com
Canopy Growth Stock Analysis and Forecast
My personal favorite of the top marijuana stocks is Canopy Growth Corp.
Among the largest marijuana companies around, Canopy Growth has seen strong movement on the stock market in 2018, growing to all-new heights.
Canopy has completed a slew of deals this year, expanding its presence in a number of markets, including Europe and South America—two very lucrative and exciting regions.
The company has also made a number of acquisitions and partnerships.
The biggest among these was the $4.0-billion investment by Constellation Brands, Inc. (NYSE:STZ), an alcohol producer. The Big Alcohol partnership will see Canopy Growth get a head start on making cannabis-infused beverages, one of the hottest products around at the moment.
Furthermore, this massive amount of capital will go a long way toward allowing Canopy Growth to make other acquisitions and expand its production capacity, especially in the wake of marijuana legalization in Canada.
After all, Canopy Growth has signed numerous supply agreements with Canadian provincial governments, giving it a steady customer base that will likely grow as its supply expands.
And the company is showing no signs of slowing down. Recently, it acquired the U.S. hemp producer ebbu LLC. This builds on Canopy Growth’s strong presence in the legal marijuana sector by diversifying its product line.
I expect CGC stock to do just fine in the coming year, especially as the cannabis market continues to expand around the world.
Aurora Cannabis Stock Analysis and Forecast
Another major player in the marijuana industry with a huge upside is Aurora Cannabis Inc.
Like Canopy Growth, it is a large marijuana producer with a number of supply agreements signed all across Canada.
Whereas Canopy Growth boasts the partnership with Big Alcohol, Aurora has tried to compensate through a number of aggressive acquisitions this year. One of the most noteworthy was the multi-billion-dollar buy of MedReleaf Corp.
While not all of these acquisitions have paid off in immediate stock gains, the company has been gaining strength lately on the stock market. These acquisitions will translate into increased production capacity, a key factor in judging the future success of marijuana producers.
Another big development in Aurora’s favor is the company’s listing on the New York Stock Exchange (NYSE).
Aurora will join Canopy Growth as the only other marijuana company listed on that exchange, providing both stocks with increased exposure to U.S. investors who are unfamiliar with Canadian markets.
This should help boost Aurora Cannabis stock both in the near future and further down the line.
Hexo Stock Analysis and Forecast
Another marijuana stock I fancy, Hexo Corp, shares some things in common with Aurora and Canopy Growth but diverges in some significant ways.
The company has scored several major supply agreements, with a strong deal made with Quebec, Canada’s second-most populous province.
This is a key factor in determining the future of a top marijuana stock; the more supply agreements it signs, the more consistent sales it can expect as it ships its products across Canada.
Another huge boon to Hexo stock is the deal the company struck with Molson Coors Brewing Co (NYSE:TAP).
The partnership represents the only other major marijuana-Big Alcohol partnership signed with a public company so far. Being a first-mover in the cannabis-infused drink space is a huge leg up on the competition.
The biggest difference, however, is that Hexo stock is still in marijuana penny stock territory, hanging at around $5.00.
This means it has a lot of room to grow, perhaps even more than Aurora and Canopy Growth.
The flip side is that it is more volatile and prone to wild swings. While all three companies have strong potential for gains, Hexo has perhaps the highest upside with the biggest potential for losses.
Canopy Growth and Aurora are more stable, but their higher prices mean there’s less of a chance for truly enormous gains. Nevertheless, I believe that both stocks will still see significant jumps in 2019.
Top Marijuana Stocks for 2019
|Name||Ticker||Current Price||Market Cap (Billions)|
|Canopy Growth Corp||NYSE:CGC||$48.91||$11.3|
|Aurora Cannabis Inc||OTCMKTS:ACBFF||$10.52||$10.1|
The future of the cannabis industry continues to get more and more exciting. With Canada’s marijuana legalization underway, we can now watch as the industry matures and develops for the first time under a legal recreational model.
As I’ve said numerous times before, other countries will be watching diligently to see if they too want to partake in the massive opportunity that is the legal marijuana sector.
And as these countries come to their senses, expect marijuana stocks to see significant gains in the coming years.
In fact, should a major economy like the U.S. or Germany make significant progress toward marijuana production, I expect that marijuana producers will see their share prices skyrocket in 2019.