4 Marijuana Stocks That Look Profitable In 2019
Zacks Investment Research | Jan 21, 2019 08:35PM ET
Marijuana stocks may not have had a stellar year in 2018. But, this year could easily bring better news as such markets continue to expand and more new marijuana markets open up.
Canada has become the first country to legalize recreational weed last October. This development has, undoubtedly, cemented the way for billions of dollars in legitimate annual sales and has helped the pot market to come out from the shadows and into the limelight as a reliable business model.
A number of developments happened in the United States as well. President Trump signed the Farm bill into law last November, legalized hemp and cannabis-based products throughout the country.
To top it, the U.S. Food and Drug Administration approved the first cannabis-derived drug, with quite a number of U.S. states giving green signal to cannabis in some capacity last year. Nearly two-thirds of all the states in the United States have legalized medical marijuana and 10 of them, in fact, allowed adult consumption.
Companies in this up-and-coming industry, thus, have taken aggressive steps to raise cash, go public and list their shares on the U.S. bourses to access capital. Hence, looking at some of the stocks from this fast-growing industry doesn’t seem like a bad proposition.
Marijuana Sales to Skyrocket
According to Arcview Market Research and BDS Analytics, global consumer marijuana outlays are estimated to climb 38% to $16.9 billion this year, up from a projected $12.2 billion last year, $9.5 billion in 2017, and $6.9 billion in 2016. Additionally, compounded global annual sales growth of cannabis from 2017 to 2022 is expected at $31.3 billion.
While legalization of marijuana in several U.S. states and in Canada will surely help cannabis growth to hit such a promising number by 2022, a number of dispensaries have been given the permit to sell legalized cannabis. At the same time, mergers and acquisitions between large beverage, tobacco, pharma and cannabis companies should certainly help the weed market grow. After all, deal making will diversify their product portfolio and propel growth.
Investment bank Cowen & Co said that the legal weed market is expected to reach a worth of as much as $75 billion by 2030. This indicates that there are plenty of opportunities for investors to make money from both direct and subsidiary players.
Fast-Growing Marijuana Stocks to Consider in 2019
As excellent prospects are expected to make marijuana stocks winners this year, take a look at these selected few poised to move north this year. All these stocks possess a Zacks Rank #3 (Hold). You can see Medical - Products industry so far this year (+40.9% vs +2.9%).
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Innovative Industrial Properties, Inc. (NYSE:IIPR) focuses on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities.
With more states in the United States giving cannabis the green light, Innovative Industrial Properties has incentive to acquire additional properties. The Zacks Consensus Estimate for its current fiscal year earnings has risen 1.8% in the past 90 days. The stock’s expected earnings growth for the current year is 68.7%, way more than the industry’s projected meager gain of 0.7%. The company has outperformed the REIT and Equity Trust - Other industry on a year-to-date basis (+19.7% vs +6.1%).
KushCo Holdings, Inc. (OTC:KSHB) operates a creative design agency for cannabis and non-cannabis clients that provide brand strategy, design and marketing, Web application development, and e-commerce solutions.
KushCo, by the way, had acquiredSummit Innovations known for manufacturing hydrocarbon gases. These gases are necessary for converting cannabis plants into oils, and we all know that oil generates more profits than traditional dried flower.
The stock’s expected earnings growth for the current year is 100%, way higher than the industry’s projected gain of 8.5%. The company has outperformed the Diversified Operations industry in the last one-month period (+17.8% vs +15.3%).
Canopy Growth Corporation (NYSE:CGC) engages in growing, possessing, and selling medical cannabis in Canada. In fact, in terms of aggregate sales, Canopy Growth may find itself at the top spot. The company’s annual production comes in at more than 500,000 kilograms and is positioned to increase on branding and partnerships.
The stock’s expected earnings growth for the current year is 253.1%, way higher than the industry’s projected gain of 3.4%. The company has outperformed the Medical - Products industry so far this year (+61.9% vs +2.9%).
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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