3 CBD Stocks To Dominate a Budding Industry

 | Nov 24, 2022 02:20AM ET

  • Charlotte's Web is the largest U.S. publicly traded CBD pure play
  • Cresco Labs is a diversified integrated cannabis company
  • Jazz Pharmaceuticals has the only FDA-approved CBD drug

    • The CBD industry has faced its share of hurdles but one thing is clear: It is here to stay and should grow at a high double-digit compound annual growth rate (CAGR) for the next six years or more. As of 2021, the CBD industry was valued at just over $12.8 billion and is expected to grow at a 20% CAGR through 2028. That’s a gain of 250% over the next six to seven years and the estimates could be low. Sales of CBD products accelerate as the industry deepens its penetration and consumer awareness grows. At the end of 2021, up to 30% of all Americans had tried CBD and the number continues to grow. As of November 2022, more than 60% of all Americans think CBD is safer than alcohol and 26% use it on a regular basis.

    The biggest hurdle to CBD industry growth? Federal regulation, despite legalization in the 2018 Farm Bill, but not in the way you may think. In many cases, its uses are medicinal in nature and that brings in the FDA. CBD products cannot be labeled to make consumers believe they have medicinal qualities, even though many consumers use them for that reason.

    You may want to keep an eye on CBD stock like Charlotte's Web, Cresco Labs and Jazz Pharmaceuticals for their market-shattering capabilities.

    h2 1. Charlotte’s Web: The Largest U.S. Pure Play/h2

    Charlotte's Web (OTC:CWBHF) is the largest CBD pure play in the U.S. and a publicly traded company. The No. 2 through No. 5 players are all privately held. Charlotte’s Web was founded in 2013 to help alleviate people's pain and suffering. Created specifically as a vehicle to help Charlotte Figi, who suffered from a rare form of epilepsy, its products are CBD-specific and wellness-oriented.

    The company’s revenue should top $75 billion in 2022, which is down on a year-over-year (YOY) basis but growth should resume in 2023. Profitability remains the biggest hurdle for this business but that is due in large part to reinvestment in the business and the development of new products.

    Price action in Charlotte’s Web retreated to an all-time low below $1 in 2022 but analysts still rate the stock as a "buy." The four analysts with current ratings render the MarketBeat consensus as a "moderate buy" with a price target above $1. That implies a gain of nearly 85% and it could be just the beginning as the use of CBD and CBD regulatory approvals gain traction.