Emerald Health Therapeutics Stock: Why a Higher Price Is Likely Coming for This Pot Grower

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Emerald Health Therapeutics Stock Surging to Higher Levels

We are just a month away from when smoking pot will be legal in Canada. I trust there will be a massive flow of eco-tourism to the country when that happens.

While I wouldn’t advise Americans to declare when they come back across at the border that they had bought or smoked marijuana, the reality is that what happens in Canada could trigger the legalization of pot around the world.

As an investor, however, you might want to have some risk capital investments in pot stocks.

Consider that the North American Marijuana Index, comprised of 41 marijuana-related stocks, is up 206% for the year as of September 13, which is nine times better than the Nasdaq and a whopping 14 times better than the S&P 500.

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Now, there is no assurance that pot stocks will continue at this frantic pace. However, the signs point to higher prices on the horizon for those willing to ride out the volatility.

A small-cap pot stock surging on the charts is Emerald Health Therapeutics Inc (OTCMKTS:EMHTF, CVE:EMH). It is up a monstrous 95% over the past month and 315% for the year.

So while Bitcoin is down 58% this year and cryptocurrencies are hemorrhaging, pot stocks are flying high, so to speak.

The run-up in Emerald Health Therapeutics stock is likely somewhat overdone in the near term. However, the company is rapidly expanding its production capacity. It could reach up to 200,000 pounds of high-quality medical-grade marijuana annually.

Chart courtesy of StockCharts.com

Why Emerald Health Therapeutics Stock Could Head Much Higher

Emerald Health Therapeutics stock is adding distribution deals as the official Canadian launch nears.

It will be an authorized cannabis supplier to the Newfoundland Labrador Liquor Corporation and the Ontario Cannabis Retail Corporation.

The Ontario market will be a major test for Emerald Health Therapeutics, since the province is the largest in Canada, with a population of roughly 14.2 million or 40% of the country’s population.

What Emerald Health Therapeutics stock really needs is for the recreational marijuana market to expand in the United States, where nine states currently allow for recreational marijuana. Consider that there are more people in California than in all of Canada.

For now, Emerald Health Therapeutics needs to work on bringing its capacity online and see how well the Canadian market does.

The recent news that major beverage seller Constellation Brands, Inc. (NYSE:STZ) was acquiring a 35% interest in Canopy Growth Corp (NYSE:CGC) for nearly $4.0 million helped support the bull story behind pot stocks and provided credibility.

We also saw Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB) pay $290.0 million for Uruguay-based ICC Labs Inc (OTCMKTS:ICCLF, CVE:ICC), which has a 70% share in Uruguay’s pot market.

Analyst Take

Just like when Aurora Cannabis acquired mid-cap rival MedReleaf Corp. for over CA$3.0 billion in May, we could see increased mergers and acquisitions surface.

Given its small market cap of $545.0 million, Emerald Health Therapeutics stock could be open to a takeover by a bigger company looking to consolidate the pot segment.