Marijuana in 2019: A Huge Leap Forward
It’s no overstatement to say that the marijuana industry has made more strides in 2019 than any other year, with maybe the exception of 2015, when Canada elected a new government with a mandate to legalize pot.
Sure, marijuana stocks enjoyed a boost from Canadian legalization moving from promise to reality last year, but that led to several boom-bust cycles due to the hype.
In 2019, however, everything has been firing on all cylinders for the top pot stocks, and I think the year is only going to get better.
We’ve just crested the halfway point of 2019, and almost all of my top marijuana stock picks have been doing very well, as can be seen in the chart below:
Chart courtesy of StockCharts.com
With gains ranging from 30% to almost 100%, my five top pot stocks are all on their way to steady gains.
So what’s motivating such strong gains? The biggest reason is the numbers.
With recreational cannabis sales legal in Canada, we have been seeing the marijuana industry come through on its promise of providing a much-desired good to millions of consumers.
The result has been very strong growth among pot company revenues, with many of the companies doubling or even tripling revenue in their most recent quarterly reports.
These strong earnings reports have inspired confidence among investors, leading them to double down on pot stocks, juicing share prices.
This is a function of the maturity of the market. Whereas, in the past few years, marijuana was still seen as an illicit drug in the eyes of many, it has now hit the mainstream and is increasingly considered to be just like any other good.
This can be seen in the various partnerships that cannabis companies have signed over the past few years.
From deals with Big Alcohol and Big Tobacco to rumors that soft drink companies are looking to enter the cannabis space, there’s no doubt that marijuana has reached a new peak in terms of popularity and acceptance.
With that acceptance comes a higher dose of capital. And that usually leads to higher stock prices.
Another benefit of this maturation is that the political side of things has also been shaking out in marijuana’s favor. Consider all of the U.S. states that have legalized cannabis. We now have 10 states where recreational marijuana is legal, and that number continues to grow.
Illinois seems poised to be the next state to make the leap, with a very supportive governor and a state senate that has already given the go-ahead.
Even more importantly, many of the top potential presidential candidates for the Democratic Party for the 2020 election have plainly stated their support for pot reform.
Candidates like Cory Booker, who is among the upper half of the very crowded Democratic Party primary field, have introduced marijuana reform more than once. Their pot bona fides are confirmed, and if one of them wins the Democrat nomination and then the U.S. presidency, we could expect to see action on federal marijuana legalization within the next few years.
This is the first time in American politics when a pro-marijuana candidate has a very good chance of making it into the White House. If that were to happen (and if marijuana reform were to promptly follow), marijuana stocks would likely skyrocket in price.
So you see, we’re entering what is looking more and more like the golden age of cannabis.
The legal marijuana industry is still small enough to see huge stock gains, but big enough that we don’t have to worry about it being a flash-in-the-pan, all-hype situation.
With that being said, let’s take a look at my top five marijuana stocks and why I like them.
Top Pot Stocks in 2019
Canopy Growth Corp (NYSE:CGC): The industry leader, Canopy Growth stock is powered by a very strong foundations, solid leadership, and a position at the top of the market.
Along with Canopy Growth’s massive partnership with Constellation Brands, Inc. (NYSE:STZ), that to date is the largest investment deal between marijuana and Big Alcohol, CGC stock has all that it takes to see its gains continue to soar in 2019 (and beyond).
Furthermore, Canopy’s recent option to acquire Acreage Holdings Inc (OTCMKTS:ACRGF, CNSX:ACRG.U) allows the company to enter the U.S. market when federal legalization seems near. That’s a huge step up on the competition.
Hexo Corp (NYSEAMERICAN:HEXO): Probably my favorite marijuana stock, there’s a lot to like about HEXO stock.
The company is smaller than Canopy Growth, but it has a lot of the same stellar qualities: a partnership with Big Alcohol, a reasonable evaluation, skilled leadership, good supply agreements, and strong supply capacity. It’s all there.
And considering that Hexo is still a marijuana penny stock, you’d be hard pressed to find a stock with a higher ceiling while still having solid foundations that insure it against volatile swings.
OrganiGram Holdings Inc (NASDAQ:OGI): Another marijuana penny stock, OrganiGram stock recently listed on the Nasdaq, becoming just the third pure-play cannabis stock to do so. Alongside Hexo, OrganiGram is one of the few pot stocks generally considered to be undervalued, making it a steal at its penny-stock price.
Cronos Group Inc (NASDAQ:CRON): Since its partnership with Big Tobacco via a billion-dollar deal with “Marlboro” cigarette maker Altria Group Inc (NYSE:MO), Cronos stock has been one of the hottest stocks in 2019.
Aurora Cannabis Inc (NYSE:ACB): A long-time favorite of mine, despite having fallen on tough times for parts of 2018, Aurora Cannabis stock is looking to storm back into gains, with long-term potential and a number of strong plays. The largest marijuana company without a major partnership, be on the lookout for big things from Aurora in the near future.
The legal marijuana industry has been extremely impressive in the first half of 2019. The top pot stocks have seen plentiful gains, and the sector has been making strides on the political side of things.
In my view, the second half of the year is likely going to improve on the first half, which is great news for pot stock bulls.