These Marijuana Stocks Look Hot Right Now
With the marijuana industry largely in a political deadlock (at least at the U.S. federal level), it’s time to set our sights back on pot stocks that are individually exceeding expectations.
Lately, we’ve been seeing some exciting action from two marijuana stocks in particular: Tilray Inc (NASDAQ:TLRY) and Cronos Group Inc (NYSE:CRON).
Tilray stock has made huge waves in 2021. It has been extremely hot since the company began its acquisition of Aphria Inc.
Merged together, Tilray and Aphria are poised to be one of the largest marijuana companies in the world, challenging Canopy Growth Corp (NYSE:CGC) for dominance, at least as far as market cap is concerned.
Now, TLRY stock has never been my favorite pot stock, mainly due to how it entered the market. In late 2018, when it had its initial public offering (IPO), Tilray stock saw massive gains as the market was ravenous for marijuana stocks, especially IPOs, and especially IPOs on a major U.S. stock exchange.
That excitement sent share prices skyrocketing, which set TLRY stock up for a long, protracted fall. As Tilray stock began to balance out after a few years of losses, it finally regained its footing and started to see some gains.
In other words, it looked as if the worst times were behind it.
But history does love to repeat itself. TLRY stock spiked after Tilray Inc’s acquisition announcement, but it fell again in the months that followed.
Chart courtesy of StockCharts.com
But now that the acquisition is complete, things are looking up once more for Tilray stock.
Over a recent three-day period, TLRY stock gained nearly 14%, implying that a major rally could be in the works.
The idea of getting shares of a powerful player in the marijuana sector after stock market volatility opened the way for a pretty strong rally has had many investors salivating. After all, as the industry continues to grow, Tilray stock’s size and capacity will come into play more and more.
It’s worth noting that the volatility is here to stay. TLRY stock is in a tricky spot in terms of accurate evaluations. And to be fair, most of its promise won’t be fully realized until the marijuana industry fully matures—or at least matures more than it has already.
Which is to say, we need to see more markets open up to legal pot in order for Tilray stock to be more accurately valuated.
The takeaway, then, is that there’s money to be made in TLRY stock right now. Whether you can stomach the volatility, however, is an entirely personal question.
Some good long-term news, however, is that the Swiss National Bank bought 175,900 Tilray shares in the first quarter, lifting its total investment in the company to 289,300 shares. (Source: “Swiss Central Bank Bought Li Auto, XPeng, Zoom, and This Marijuana Stock,” Barron’s, May 16, 2021.)
This continued institutional support points to a shifting trend in which we can expect to see more money flood into the marijuana industry.
And as more money floods in, share prices will no doubt rise. Moreover, pot companies will be gaining the funds necessary to invest in growing their businesses, which in turn should boost revenue and encourage more investment in pot stocks.
In other words, we could begin to see positive feedback loops develop among marijuana stocks.
Cronos stock is another pot stock that has recently seen a few gains.
CRON stock actually has a similar history to TLRY stock. Fueled by hype, Cronos stock has soared more than once in its nearly five years as a publicly available marijuana stock.
Each time CRON stock reaches new highs, however, it has been invariably dashed back to Earth.
All that said, Cronos stock has seen enormous gains over its lifetime. At some points, CRON stock rose thousands of percentage points during the most frenzied rallies (like in 2019, following the legalization of marijuana in Canada).
I’ve long been skeptical of Cronos stock (and Tilray stock, for that matter) because both of them, to me, were overly vulnerable and volatile.
In my mind, why invest in a stock that could go up 20% today and go down 30% tomorrow, when there are perfectly good alternatives that can net larger gains while being more stable (with the caveat that these stocks take more time to rise).
But now we’re beginning to see the tide turn on both Tilray Inc and Cronos Group Inc. Whereas before they were powered mainly by hype and dreams, it’s looking like the market has finally priced these companies correctly.
What’s more, as the pot stock market begins its bounceback, I wouldn’t be surprised at all if TLRY stock and CRON stock were among the first marijuana stocks to see big gains, largely due to their newfound balanced price points.
There’s a lot of excitement building around the marijuana market these days. It appears more and more that a recovery is imminent. But during that recovery, some pot stocks will no doubt perform better than others.
To that end, I believe that Cronos stock and Tilray stock are well worth looking into. Both of them have the potential to see some pretty significant gains as the cannabis industry continues to gain momentum.
While neither TLRY stock nor CRON stock is my top pot stock, both of them have serious upside that marijuana stock investors should look into.