The marijuana stock market has been on fire in recent days. Many of our top pot stocks have seen their share prices grow significantly over the past week, with several rising by 20% or even 30% in as few as five days.
In certain cases, cannabis stocks have been gaining 30% a day as the sector stages a massive rally.
What we have here is the fulfillment of a promise I’ve long made: the marijuana stock market is going to bounce back, so getting into pot stocks at bargain prices could be the best move investors make all year.
Investors who are new to the sector are now being gifted the opportunity to invest in marijuana stocks at attractive prices.
And as we’ve seen in recent days, those low prices will not hold forever. The massive resurgence shows just how strong the gains can be during the cannabis stock market recovery.
Another huge factor helping to spur marijuana stock growth right now is the issue of federal U.S. marijuana legalization.
Still viewed as the Holy Grail of the marijuana business, when pot becomes federally legal in the U.S., pot stocks should skyrocket on the back of the largest cannabis market in the world opening up.
Marijuana stocks doubled and tripled in value in the lead-up to Canadian marijuana legalization. There’s no reason that can’t happen again with U.S. marijuana legalization.
Furthermore, with weed stocks currently trading at bargain prices, the gains will be that much stronger later.
A huge milestone was crossed recently when the U.S. House Judiciary Committee approved a sweeping cannabis reform bill by a vote of 24–10. (Source: “US House panel passes federal cannabis legalization bill in historic vote,” Marijuana Business Daily, November 20, 2019.)
The Marijuana Opportunity Reinvestment and Expungement Act of 2019 (MORE Act) could open up the legal cannabis business across America, similar to how the Agriculture Improvement Act of 2018 helped normalize the hemp and cannabidiol (CBD) industry.
That act saw the U.S. CBD market explode in value, so we can anticipate a similar thing happening with the MORE Act—if, of course, it can make it into law.
There remain quite a few obstacles in the way of federal U.S. marijuana legalization. Still, the committee vote is a landmark achievement in the fight to end prohibition.
The bill would not be voted on until 2020, in any case, and the Republican-controlled Senate has made itself clear that marijuana reform is unlikely to pass into law so long as Mitch McConnell remains as the Senate majority leader.
But Republicans aren’t totally against marijuana legalization. They prefer, however, a states’ rights act that would codify the federal government’s position on legal marijuana in U.S. states, barring interference from the feds in said states.
While it would be a lesser achievement compared to the MORE Act, either legislation would dramatically reshape marijuana laws in the U.S. and help drive interest back into the market.
“The MORE Act would ensure cannabis consumers and businesses are treated fairly under the law. It would also bolster state and industry efforts to promote diversity within the cannabis business community, while helping individuals and communities adversely impacted by the war on drugs,” said Neal Levine, CEO of the Cannabis Trade Federation. (Source: Ibid.)
Part of the appeal of the MORE Act is a five-percent federal retail tax on marijuana. But, as I’ve said multiple times, overly burdensome taxation and regulation can be detrimental to marijuana stock growth, as it allows the black market to continue to thrive, due to the often-large price disparities between legal and illegal pot.
While a five-percent federal sales tax likely wouldn’t cripple the U.S. legal marijuana market, added on top of high state-level taxes, it could be detrimental to weed stock growth. But that’s really inconsequential compared to the massive boost that federal U.S. legalization of marijuana would cause for pot stocks.
Top Pot Stocks See Massive Gains
As if awaking from a daze, investors seem to have finally remembered just how lucrative and special the marijuana stock market is.
While they were concerned about less-than-ideal sales numbers, the fundamental potential of the marijuana market has never wavered.
And that fundamental potential involves a globally-enjoyed consumer good being legalized internationally in a process that’s still happening.
While Canada has had its issues with marijuana sales due to a multitude of factors (but mainly the continuing success of illicit pot), with U.S. marijuana legalization on the horizon and marijuana stocks trading at such good prices right now, there is a perfect storm for potential gains.
Chart courtesy of StockCharts.com
OrganiGram Holdings Inc
OrganiGram Holdings Inc (NASDAQ:OGI) is among my top pot stocks, and is a marijuana penny stock worth watching.
This strong company has a number of supply deals in place that make it a very powerful mover in the marijuana industry. On top of that, the company is the right size right now to be able to experience exponential growth moving forward.
And we’re seeing its share prices wing upward following months of decline, with the lower prices being an absolute steal for OGI stock.
OrganiGram stock shot up 20% on November 21. This followed a week of extremely high gains, with OGI stock having marshaled a 35% turnaround. These types of gains will likely become more and more normal as the marijuana industry gets back to its appropriate stock prices.
And OrganiGram stock was hardly alone in marking excellent gains. Hexo Corp (NYSE:HEXO) was another marijuana penny stock that saw a very strong turnaround in recent days.
HEXO stock gained a whopping 37% in a single day by the afternoon of November 21. The stock saw roughly a 50% turnaround in a week.
That again speaks to the massive overreaction of investors to the initial marijuana stock market downturn, and to the renewed confidence that’s building because of the momentum behind U.S. marijuana legalization.
This is something that anyone paying attention to the marijuana industry knew would happen. And now that it’s all coming together, we’re going to see share prices hit their former highs faster than you might think.
As a result, marijuana stocks are likely going to see huge gains for a while yet, until they become appropriately priced once again.
In the cases of OGI stock and HEXO stock, I believe both will be trading at $6.00 in the next year or two, good for about 100% gains.
Canopy Growth Corp
The last marijuana stock surge I’ll cover today is Canopy Growth Corp (NYSE:CGC). The marijuana stock market right now is so bullish I could have chosen any number of excellent pot stocks, but CGC stock is often considered the industry leader.
In any case, Canopy Growth stock skyrocketed at a similar velocity to HEXO stock and OrganiGram stock, with its shares gaining 20% on November 21. The company also marked a 45% rally in a week.
While HEXO stock and OGI stock are marijuana penny stocks with massive footholds in the industry that far outweigh their share prices, CGC stock is often more in the spotlight.
As a result, I’m not as confident that Canopy Growth stock can achieve 100% gains in the coming year. CGC stock can, however, easily rise another 50% when all is said and done.
The company also has a number of strong positions in the U.S. marijuana market, meaning that, even though it is a Canadian marijuana company, it is among the best suited to profit from U.S. marijuana legalization.
The marijuana stock market has been rallying, and investors who did not lose faith in the market have been reaping rewards.
There was little chance that the entire sector would remain down for long, and those who were able to invest at the nadir have seen huge gains.
But it’s not too late for newer investors. Long-term, the marijuana industry is still as exciting as it has ever been. As a result, CGC stock, OGI stock, and HEXO stock (and others) are top pot stocks that are likely going to see their values surge as the cannabis stock market recovery sets in.
The overall impact of the recent gains is to renew confidence among investors in the top pot stocks. Investors looking to profit from a massive upward surge in a market need look no further than the marijuana industry as it mounts a comeback.
With momentum building behind U.S. marijuana legalization and the industry growing abroad as well, there’s little reason to doubt that weed stocks will make a comeback.