At this time last year, a lot of investors were betting that 2019 was going to be the year of pot stocks. Marijuana companies were expected to move closer to profitability and investors were looking for big gains.
As it turned out, 2019 was horrible for investors in pot stocks. It is undeniable that marijuana has a lot of potentials. The market is huge, and continues to grow and expand as more states in the U.S. advance medical and recreational legislation.
Pot stocks are down sharply from their highs, and a lot of investors are considering jumping into the sector. Quebec lifted the legal age for marijuana to 21, which is the highest in the country and has investors worried other regions will follow suit, and in the U.S. the FDA has yet to give retailers clear guidance on the fast-growing CBD market.
There is a lot of uncertainty in the sector, but with the risk comes a lot of reward potential. Here is a look back at how the big players fared in 2019.
Tilray (TLRY)
Tilray (TLRY) shot into the atmosphere after going public in mid-2018, but its meteoritic rise to fame quickly ended and after hitting a high just short of $220, the stock dropped sharply and is currently trading at $15.61 a share. The stock has lost 78% since the start of 2019. The company is losing money, which analysts expected, but the losses have been greater than expected the last four quarters which has kept pressure on the stock and will continue to weigh on the stock until the company is able to prove to Wall Street it can, at least, keep pace with estimates. Tilray is a huge producer in Canada but is still working on arrangements to produce hemp in the U.S. after it was legalized last year. As CBD's acceptance spreads in the U.S., the potential market is huge, and once retailers get clearer guidance from the FDA sales will shoot high. Analysts continue to see a lot of upside in the stock with an average price target of $28.71.
Canopy Growth Corp. (CGC)
Canopy Growth Corp. (CGC) shares hit a ceiling last May, and the stock has fallen sharply in the months since. After hitting a 52-week high of $52.74 in April the stock is currently trading at $19.77, down 62%. The company continues to operate at a loss, but there is optimism that the company could move closer to a profit once a new CEO takes the helm on January 14. David Klein comes to the company from Constellation Brands (STZ), which happens to be the company's biggest partner and shareholder. CGC remains in the lower end of its 52-week range, but shares have started to rebound over the last two months. Canopy is one of Canada's biggest marijuana producers, and there is a lot of upside potential as additional market open and the company continues to scale up operations. Analysts have an average price target of $27.32 average price target on the stock.
Aurora Cannabis Inc. (ACB)
Aurora Cannabis Inc. (ACB) is a Canada based marijuana producer of medical marijuana. ACB is another stock that rose sharply higher in 2017 before crashing in 2019. The stock was trading around $10 a share last March but has since fallen to its current price of $1.90, just $0.02 above its 52-week low. Aurora is attractive because of its size, which gives it the potential to be the world's leading producer of marijuana. Aurora has operations in 24 different countries, and its global footprint sets it apart from the rest of the sector. The company is still seeking a big partnership with a company outside the marijuana sector. Unlike some of its competitors, Aurora wants a deal but doesn’t want to give up a chunk of equity to make a deal happen. This is slowing any potential deal but could result in a huge payoff for investors if and when a deal is reached. With ACB trading just above its 52-week low there is a lot of upside potential for investors that are willing to bet that the marijuana sector will regain Wall Street's confidence in 2020. Analysts have an average price target of $3.60 on the stock.
