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Warrior Trading Blog

The Best Marijuana Stocks For 2019

marijuana stocks

Today, the marijuana industry is experiencing tremendous growth thanks to changes in rules and regulations around the world. According to medical researchers, marijuana has started to show a huge potential especially towards medical use.

As a result, several biotech companies in the US have started to develop cannabis medical applications. This has resulted in several start-ups rushing to join in the craze to cash in on the venture.

Problem is majority of these start-ups may end up failing because large biotech companies have already taken a large chunk of the market.

Want to get a taste of the profits from marijuana stocks? Then check out these top rated marijuana stocks that are positioning themselves to be at the forefront of the marijuana industry.

Tilray Inc.

As individual states in the U.S. and countries like Canada continue to legalize marijuana, they are also decriminalizing the drug for medical and recreational use. Tilray Inc (NASDAQ: TLRY) is among the top cannabis stocks that are poised to succeed in this massive new market.

The Nanaimo, Canada-based company has two factors working in its favor. First, it had over 850,000 square feet (domestically) of production capacity at the end of last year, and approximately 250,000 square feet devoted to cultivation in foreign markets. 

That should give the company more than ample capacity to continue nabbing significant recreational marijuana market share.

Second, the relationships that Tilray has established with multiple different companies in different industries make it well positioned to be one of several possible winners.

The company has partnered with AB InBev on the beverage front, Novartis International AG on the medical front, as well as Privateer Holdings for equity. These partnerships give the marijuana grower some of the essential ingredients it needs for long-term growth.

Tilray has been providing medical cannabis in Canada since 2014 and became the first marijuana producer from the country to ship medical marijuana to parts of Europe in June 2016.

The company was exporting medical cannabis to New Zealand and Chile by February 2017. A few months later, it began exporting medical marijuana to Cyprus and Australia.

Tilray’s total revenue totaled $43 million last year, up 110% from 2017. However, net loss deepened in 2018 to $67.7 million from $7.8 million in the previous year.

Shares of Tilray have been on a wild ride since the company went public in July 2018. The stock rose as much as 1,665% to an intraday high of $300 in September but has lost more than 70% since then.

Canopy Growth Corp

Canopy Growth Corp (NYSE: CGC) is currently the biggest player in the global marijuana industry. Wall Street likes the strength that Canopy has both in its Canadian and international markets, as well as its sizable production capacity.

Furthermore, investors adore the relationship that the company entered into with beer maker Constellation Brands in 2018.

Canopy Growth received $4 billion from Constellation Brand last year, giving the Smith Falls-based company unprecedented visibility into becoming one of the long-term winners of the marijuana industry through early, aggressive, and huge investments.

Earlier this month, Canopy also entered a deal with Acreage – a major U.S. cannabis operator – to acquire that company for $3.4 billion once the U.S. legalizes marijuana.

The deal offers Canopy a foothold in the American market, considering that Acreage is already present in 20 states with 22 growing and processing sites as well as 87 dispensaries. The U.S. marijuana market is estimated at about $10 billion, which is 10 times bigger than Canada.

Given all of this, many of Wall Street analysts are cuddling up to CGC and continue to be more enthusiastic about the prospects of its shares.

Cronos Group Inc

Cronos Group Inc (NASDAQ: CRON) is a cannabis stock enjoying considerable attention from the media. Shares of the company have been on fire since becoming the first marijuana company to list on a major U.S. stock exchange in February 2018. Like Tilray and Canopy Growth, Cronos is also based in Canada.

The company produces and sells medical cannabis in the country. It also ships its products to Germany-based G. Pohl-Boskamp GmbH for distribution in the country. Cronos has also received a license via a joint venture in Australia and is setting up a growing site in Israel.

In December, Altria Group injected $1.8 billion in Cronos Group for a stake of 45% in the company. The tobacco giant had a couple of great reasons for putting its money in Cronos Group that regular investors should also consider when buying shares of the cannabinoid company.

“Cronos strong management team has built unique capabilities to compete globally across the medicinal, recreational and nutraceutical categories. Our investment will allow Cronos to more quickly expand its global footprint and production capacity,” said Altria CEO Howard Willard during his most recent quarterly discussion with shareholders.

Cronos continues to take advantage of the global current opportunity and hopes to clinch a share of the U.S. market too once weed is legal at the federal level.

MedMen Enterprises

MedMen Enterprises (NASDAQOTC: MMNFF) is a high-end cannabis dispensary based in Culver City, California. The company operates a chain of premium retail outlets that cater to pot users who opt to pay more for a boutique experience.

Although its business model does not suit all locations, it is paying off in some tourist destinations and wealthy areas in California.

MedMen’s market cap has jumped 197% over the past year, but shares are down more than 10%. Its locations are performing well enough to generate net revenues, though operations are burning cash. Operations generated $29.9 million in revenue during the period but still lost $61.8 million.

MedMen posted sales, general, and administrative expenses of $74.3 million (up 589%) for the three months ended December 29, 2018. Meanwhile, its operations lost $61.8 million despite bringing in revenues of $29.9 million during the period.

While Medmen may seem like an unsafe stock, it is still one most likely to put up the big gains marijuana investors have gotten used to.

Marijuana Penny Stocks

Trading OTC penny stocks is inherently riskier than trading listed stocks on the NASDAQ or NYSE. They don’t have the same rules as far as reporting financials and business initiatives as well as governance by the SEC which makes them far less transparent and subject to manipulation.

With that said, we are not recommending investing in the following stocks but are simply providing information on popular marijuana penny stocks.

Terra Tech Corp.

Terra Tech stock chart

Terra Tech Corp. (OTC: TRTC) is focused on cannabis agriculture and cultivation for medical marijuana and is currently based in Irvine, CA. They utilize hydroponic growing techniques along with their own proprietary technology for growing some of the gnarliest buds in town.

They are currently trading around 25 cents per share and trade an average of around 5 million shares per day. Their most recent earnings results they reported over 7 million in revenues and that was after leaving the ornamental flower business.

With demand increasing and the potential for more states to legalize, Terra Tech could be in a great position to expand exponential over the next 5 to 10 years.

American Green Inc

American Green stock chart

There has been a lot of buzz around American Green (OTC: ERBB) lately as they have recently purchased over 120 acres in Nipton, CA, a small ghost town on the perimeter of the Mojave Desert, where they are looking to turn it into an off the grid “pot paradise.”

American Green specializes in the cultivation and distribution of medical and recreational marijuana.

ERBB has a share price of $0.0022 currently and trades on a daily average volume of about 140 million shares. The company has just under 14 billion shares outstanding and a market cap of just over 30 million.

With the news about Nipton, CA, shares are experience a surge in volume and interest by both investors and traders. Expect shares to remain volatile as it will likely be a while before the company sees any revenues from their latest acquisition.

Canadian Medical Marijuana Stocks

Canada has a unique first mover advantage in the marijuana industry as they are one of only two countries that currently exports marijuana. The other is the Netherlands. They are also introducing new legislation in 2018 to legalize marijuana and if that is passed it will only help fuel the growing industry.

With global demand for medical marijuana on the rise, Canadian distributors are in an excellent position to dominate the global export business as companies will be able to build strong brand recognition and important business relationships before most other companies will have the opportunity to.

That’s why investors like Dan Bilzerian are looking to jump on the marijuana band wagon!

Some of the best marijuana stocks to watch out of Canada are Canopy Growth and Aphria. Both trade on the Toronto Stock Exchange (TSX) and are kicking out strong revenue growth year over year.

Aphria Inc.

Aphria Inc. (TSX: APH),(OTC: APHQF) is another Canadian pot stock that is positioned for excellent growth. They’ve been on a 5-quarter hot streak of turning profits and recently reported a loss in the fourth quarter only because of a $5.5 million capital expenditure to expand operations.

They are approaching $20 million in revenues which is astonishing considered they put up just $550,000 in 2015. You can check a cool video of their grow operations below:

Shares of APHQF are currently trading at $4.62 on roughly 120,000 in average daily volume and a current market cap over 850 million. Shares are slightly up on the year on have been on a decent uptrend since bottoming out at $3.52 earlier in the summer.

Risks With Investing in Marijuana Stocks

Although marijuana stocks are scorching hot right now, there are certain risks you need to know about including increased competition and political risk from the federal government.

Right now, the marijuana industry is growing faster than the pot plants they are selling. However, large biotech companies have taken much of the market share when it comes to providing medical marijuana solutions.

This has enabled them to get a head start over startup companies that have fewer resources.

Problem is others want a piece of this cake. As a result, start-ups are popping up everywhere and will undercut prices to get some of the market share which will ultimately benefit the end-user with more competitive prices but could also limit the potential the bigger company’s have.

However, the marijuana industry is still brand new with a ton of different ways for these companies to capitalize.

Federal Marijuana Laws

Another major risk involved with investing in the marijuana industry is that it is still technically illegal on the Federal level and pot stocks aren’t technically allowed to be listed on any major exchange.

“As long as cannabis is classified as a Schedule I substance, Wall Street’s regulator-in-chief isn’t going to approve an S-1 filing from a cannabis company wishing to go public.”

This means that most US marijuana stocks will only be able to trade Over the Counter and that means that they don’t have to adhere to the strict rules and regulations that are set in place to protect investors like financial transparency business initiatives.

That doesn’t mean all companies are deceiving investors it just means that they don’t have as strict of guidelines to follow.

Despite these risks, the marijuana industry is still a force to be reckon with. Popularity is gaining and more states are approving medical marijuana usage with recreational weed right behind it.

Final Thoughts

Despite the risks described above, there are lots of rewards from the hottest marijuana stocks thanks to the probability of changes in federal law and the benefits that medical marijuana provides.

Check these names out if you’re interested in dipping your toes into the marijuana industry.