With so much excitement around the rapidly growing marijuana market, last month we took a look at three different sectors for investors to consider.
These sectors were the growers, the bio-tech companies, and peripheral companies with an indirect exposure to the industry. This week we want to look back over those three different groups and see which stocks among them have produced the best returns for investors in 2019.
It did not really come as a surprise that the growers have pretty much dominated during the year, as they are the easiest way for investors that see huge growth in the sector to get involved. While growers dominated the group, one biotech company has managed to appreciate enough to claim the #3 spot overall.
As the industry matures and the top growers solidify their position at the top of the pack, Wall Street’s focus will likely shift more towards the biotech and peripheral stocks, but until the top growers are able to expand enough to keep up with rising demand, they will be the hottest stocks in the market.
Here are the marijuana stocks that have rewarded investors the best so far in 2019.
Aurora Cannabis Inc. (ACB)
Aurora Cannabis (ACB) has appreciated the most in 2019 among the marijuana stocks we have been watching, with shares up 83% since the start of the year. After closing out 2018 at $4.96 the stock shot sharply higher in January and has risen to its current price of $9.07. A primary reason why ACB has been so strong during the year was a research report from analysts at Cowen that suggested the company would be the first profitable company in the space. The company has a massive growing infrastructure in place which should allow it to successfully scale up production while keeping costs under control. The company already has 20% of th recreational market, and with marijuana dispensaries struggling to keep up with demand, the companies that are able to ramp up production the quickest will come out the big winners, and ACB is perfectly positioned to be among them.
Cronos Group (CRON)
The second top-performing stock is also a Canadian grower, Cronos Group (CRON). After ending 2018 at $10.39 per share, the stock took off in January and is currently trading at $17.99 for a gain of 73% year to date. Cronos captured investors’ attention when tobacco giant Altria (MO) announced it would invest $1.8 billion in the company for a 45% stake in the company and warrants that if exercised would increase its share to 55%. Altria gives CRON a step up as more states in the U.S. move to medical and recreational marijuana given its strong political influence and massive infrastructure already in place. Cronos will need Altria’s experience and infrastructure, and Altria desperately needs a strategy to combat declining smoking rates among tobacco companies.
GW Pharmaceuticals (GWPH)
The sole stock at the top of the list that is not a grower is GW Pharmaceuticals (GWPH). GWPH has appreciated by 70% since the start of the year. The stock hit a 52-week low in late-December but roared to life in January and the stock is currently trading in the upper end of its 52-week range and approaching its all-time high. The company has the honor of being the first company with a medicine derived from the marijuana plant. Last year, the FDA approved Epidiolex, which is used to treat seizure disorders. The move was a first by the FDA, and GW Pharmaceuticals believes it will start a new wave of drug approvals, and with its experience and proven ability to successfully get a drug through FDA trials, investors are very bullish on GWPH and its potential as medical marijuana spreads in the U.S. and globally.
Canopy Growth (CGC)
Canopy Growth (CGC) is the fourth-best performing stock, but still has appreciated a very impressive 60% on the year. Canopy is another huge player in the Canadian growers market, and the company’s potential attracted major $4 billion investment from beer and spirits maker Constellation Brands (STZ). With the investment, Constellation has a 38% percent stake in the company. Edibles are a fast growing market, and Constellation and Canopy will look at tap into that market with marijuana infused beverages. Canada’s move in 2018 to legalize marijuana recreationally nationwide has resulted in a situation where dispensaries are unable to keep up with demand, and Canopy’s size and experience should allow it to be among the growers that are able to grow the fastest to keep up with rapidly growing demand. Constellation also offers Canopy a good gateway into the U.S. market if and when the Federal Government changes its stance on marijuana which will attract a wave of international growers into the market.