Evaluating My Top Pot Stocks of Years Past
The legal marijuana market is young and dynamic. As such, it’s not unusual to see pot stocks that were once riding high fall from grace and others that were relatively unknown rise up and challenge the strongest pot stocks.
That said, I’ve reexamined three marijuana stocks that, in the past, I’ve been ardently bullish on: Canopy Growth Corp (NYSE:CGC), Innovative Industrial Properties Inc (NYSE:IIPR), and Curaleaf Holdings Inc (CNSX:CURA, OTCMKTS:CURLF).
Let’s start with the one that you’re perhaps most familiar with, Canopy Growth Corp.
Canopy Growth Stock
If you’ve been paying attention to the pot stock market lately, Canopy Growth stock isn’t looking its best. Over the past 12 months, CGC stock has only gained about three percent. But in the period from September 2020 to February 2021, Canopy Growth stock skyrocketed by upwards of 200%, only to fall back to Earth.
Year-to-date, CGC stock is down by a whopping 31%.
So what does that mean for the future of Canopy Growth stock? In order to predict that, we’ll need to look at its recent past.
CGC stock was one of the first marijuana stocks to suffer during the economic collapse brought on by the COVID-19 pandemic. Since Canopy Growth Corp is one of the most high-profile—if not the most high-profile—pot companies, it made sense that people would abandon Canopy Growth stock with some alacrity.
As I’ve explained in earlier articles, since legal marijuana is still an emergent industry, during times of economic uncertainty, it will be among the first markets to see capital flight, with investors opting for more predictability and security.
CGC stock was the victim of that circumstance, alongside the Canadian marijuana market that hasn’t quite expanded the way many projected it would. Moreover, the fact that the U.S. pot market remains closed off to Canopy Growth Corp has worked to impair Canopy Growth stock’s performance.
But then, when the pandemic began to clear up somewhat and things were getting back to a semblance of normality, we saw that massive 200% spike in CGC stock’s price.
That amount of enthusiasm overcooked Canopy Growth stock, however, and a few weak quarters and no major deals, acquisitions, or excitement on the horizon ensured that all those gains were given right back.
So, where does that leave Canopy Growth Corp? In my mind, it’s one of the most volatile picks around. That means investors could either make huge sums of money or doom their portfolios, depending on when they invest.
As it stands, CGC Stock is on a downswing, so this seems like a wise time to consider the stock.
Having said that, investors who are looking for safe investments—such as those who are using their retirement savings—are probably better off looking elsewhere, like my next pick, Innovative Industrial Properties Inc.
Chart courtesy of StockCharts.com
Innovative Industrial Properties Stock
Arguably my best pick since I started writing for Profit Confidential, Innovative Industrial Properties stock has surged by hundreds of percentage points over the years. Each time I think this marijuana stock might begin to flag and stutter, it proves me wrong.
That’s why I’ve consistently been bullish on IIPR stock for years.
Innovative Industrial Properties Inc has a solid business plan of expanding its real estate empire into each state that legalizes pot. Note that the company doesn’t produce any marijuana. Rather, it leases out land on which pot can be produced.
Due to its ancillary connection to marijuana production, the company avoids many of the nasty legal hurdles that impair pure-play pot companies when it comes to things like banking and interstate commerce.
Moreover, Innovative Industrial Properties stock is a real estate investment trust (REIT), which means investors get healthy dividends alongside the prospect for continued gains.
Over the past 12 months, IIPR stock has more than doubled in price. In 2021 alone, it has climbed by nearly 40%.
In other words, if you’re investing money you can’t afford to lose, you want to see high returns, and your heart is set on the marijuana market, Innovative Industrial Properties stock could be a safe bet.
The third company I’m looking at is a bit of a hybrid of the two above companies, and to me, it holds the greatest potential.
Curaleaf Holdings Inc is one of the largest marijuana producers in the U.S. The company has holdings across the country and continues to expand with each new state that legalizes pot.
Curaleaf’s aggressive expansionist policy in the U.S. has put the company on a path toward greatness. It will likely be one of the first marijuana companies to reach $1.0 billion in revenue.
The reason I believe Curaleaf stock has more potential than Industrial Properties stock, however, is that CURLF stock is facing legal constraints.
Without pot legalization at the federal U.S. level, Curaleaf Holdings Inc has to fight banking barriers, interstate commerce issues, an inability to list Curaleaf stock on a major U.S. exchange, and an inability to properly expand beyond the U.S.
CURLF stock’s growth potential is being artificially limited by these legal obstacles.
But as the obstacles disappear, whether through full-on legalization or piecemeal approaches like the Secure and Fair Enforcement Banking Act of 2021 (SAFE Banking Act of 2021), we’ll see the potential within Curaleaf stock be released more and more.
With every major breakthrough, all the way up to federal marijuana legalization in the U.S., I anticipate that investors will see massive gains from CURLF stock.
The three aforementioned stocks all have the potential to achieve huge gains in the coming years; of that, I have no doubt. But in evaluating them, it’s important for me to be realistic and provide an honest review.
To that end, I’d say that, while Canopy Growth stock still has huge potential, it’s very risky, considering how volatile it has been, even after years of establishing itself as a major player in the marijuana market.
Innovative Industrial Properties stock, by contrast, has proven to be reliable in almost every circumstance, making it an ideal target for more conservative investors.
Curaleaf stock offers a bit of both worlds, providing a degree of volatility (and therefore higher potential) without the immense risk contained in Canopy Growth stock.