3 CANNABIS STOCKS TO BUY NOW
After a tough couple of years for cannabis stocks, the sector seems to have bottomed and the democrats winning the US election in November seems to have re-sparked the industry!
After a volatile couple of weeks for cannabis stocks – Has the bubble burst or has the recent sell-off created a huge opportunity for those who missed out on the recent rally for the sector! Let's quickly analyse what’s going on and discuss 3 cannabis stocks that I think could be some of the best investments in the market!
1) CANOPY GROWTH
What I like about Canopy is that it’s very likely the safest company for you to gain direct exposure to the cannabis market. Not only do they have some of the most recognisable products, they also have the most cash thanks to their partnership with Constellation Brands and therefore Canopy is better able to weather any storms, they can commit more to research and development and they can potentially afford to operate at a loss and undercut the competition in much the same way Netflix, Amazon & Uber did!
My concern with Canopy is that the business is currently worth up to 5x more than some of it’s closest competitors and therefore the price perhaps already reflects these huge advantages! If we start to see a rotation where investors move out of Canopy and into the riskier cannabis players then this could bring Canopy’s market cap back in line with the industry and therefore represent a huge long term opportunity!
The stock recently rose as much as 1200% as it became the most talked about stock on Reddit’s WallStreetBets forum as well the second highest traded stock on Robinhood! Apparently the plan was to perform another short squeeze given that Tilray has a tenth of the shares available to trade versus competitors like Cronos & Aurora!
However Tilray’s situation is very different to that of Gamestop! Tilray does have some short interest but nothing like what Melvin Capital had on Gamestop and a large portion of Tilray is owned by sensible investors who scooped up shares for $2 or 3 during Tilray’s crash in 2019! Therefore when the price almost touched $80 last week, these investors (myself included) decided to take profits and this likely set off a chain reaction sparking fear amongst the reddit crowd and causing the stock to collapse 60%.
However I think Tilray is much more than just a short squeeze and the company is positioned as well as any to succeed in the growing cannabis sector! Their upcoming merger with competitor Aphria will create the world’s largest cannabis company by revenue and give the business numerous advantages over their rivals! As a larger company, the new Tilray will save on costs whilst leveraging 2 sets of existing partnerships to reach new markets across the US & Europe!
The only problem with Tilray is that the attention it’s getting from short squeezers is causing huge price spikes in the stock and taking the share price to perhaps where it should be in a couple of years and not today! This can easily miss-lead investors who don’t properly understand the fundamentals of trading and therefore although I think Tilray is a sure bet in the Cannabis sector – You still need to be careful what you pay for the stock.
3) 22nd CENTURY GROUP
My third option is a little different and the stock is 22nd Century Group (XXII)! This biotech company is a tobacco specialist perhaps most famous for using patented technology to grow tobacco with basically any level of nicotine they choose! Not only are they very close to gaining regulatory approval for what they’re calling non addictive cigarettes - The company recently announced patents within the cannabis sector where they’ll be using their plant-based biotechnology to genetically modify hemp and cannabis plants to improve breeding techniques, cultivation and thc control!
XXII offers investors a different way of gaining exposure to the growing cannabis market without simply investing in the producers of dried flower, edibles and beverages. The long-term reward potential with XXII is as big as anything in the cannabis sector however the stock carries a lot of risk in many different ways – for example they’re not guaranteed regulatory approval and it’s likely that they’ll face competition from large pharma companies also looking to get into the space!
Not only does the stock of XXII carry significant risk but this is the case for most stocks within the cannabis sector. Stocks within the space share an eerily similar pattern to most cryptocurrencies – and this is because despite having huge potential, many cannabis companies and crypto’s are still pretty speculative, they have very little history of success and therefore it’s hard to separate the best from the worst in the industry!
That said, I've been investing in a number of cannabis stocks for many years now and I believe that the 3 companies mentioned above represent some of the best opportunities on the market! Not only that but when combined, I think these 3 stocks offer investors a good mixture of low, medium & high risk exposure to the space! I actually included Tilray in a post that I did 3 months ago where I highlighted 10 stocks that I believed could double in 2021! The stock is up almost 500% since then but you can check out the rest of that list HERE!
I also recently posted a video on my Youtube channel about my favourite cannabis stock GW Pharmaceuticals and 3 days later the stock jumped 50%... so make sure you SUBSCRIBE now to take advantage of my upcoming videos!
Make sure to check out these popular blog posts!
Disclaimer: All trading involves risk. Only invest money that you can afford to lose and remember that past performance doesn’t guarantee future results. Everything posted by me is for educational purposes only. I am not a financial advisor and no information on this website or any accounts linked with myself should be considered as financial advice. Remember, all trades are at your own risk.