In this article, we discuss 11 best cannabis stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Cannabis Stocks To Buy Now.
Cannabis, a flowering plant genus, boasts a rich history of utilization, primarily for its acknowledged therapeutic and medical benefits. Presently, over 52 million Americans engage with cannabis, and the trend toward legalization appears unstoppable, given the increasing number of states endorsing both recreational and medical usage. This momentum aligns notably with the Biden administration’s initiative to reclassify marijuana. Shifting it from a Schedule 1 controlled substance, characterized by having no accepted medical use and a high potential for abuse, to Schedule 3—reserved for drugs with moderate to low potential for physical and psychological dependence—reflects a noteworthy step in recognizing the evolving landscape of cannabis use in the United States.
The U.S. Cannabis market is on an upward trajectory, set to surge by $46.90 billion from 2022 to 2027. Fueled by a compelling Compound Annual Growth Rate (CAGR) of 24.03%, the industry is experiencing a significant shift propelled, in part, by the rise in medical cannabis dispensaries and an increasing awareness of the health advantages linked to medical marijuana. The primary force behind this growth, however, is the millennial demographic, the largest population in the U.S., which is propelling the market forward through their keen interest in a variety of cannabis products, especially for recreational purposes.
On the other hand, profitability remains an elusive goal for the cannabis industry due to persistent challenges. According to Hub International’s 2023 Outlook, issues such as disruptions in the supply chain, product recalls, regulatory hurdles, and economic hardships underscore the necessity for comprehensive risk management strategies to alleviate the adverse effects of these challenges. The sector is contending with mounting inflation and escalating costs for essential resources like fertilizer, building materials, and packaging, exerting a detrimental impact on its financial viability. Despite these pressures, cannabis companies are hesitant to increase prices in a fiercely competitive market. Notably, in the first half of 2022, more than 20 of the largest publicly traded cannabis companies collectively suffered losses totaling around $550 million, despite generating revenues nearing $4.5 billion. Navigating and adapting to the diverse legal frameworks across states also present challenges for both businesses and consumers alike.
With that said, the acceptance and normalization of cannabis are steadily increasing, with each mainstream reference and recognition contributing to the erosion of opposition toward federal legalization. Despite variations in political predictions, the normalization of cannabis represents a significant opportunity for operators, brands, and markets to expand their presence in 2023. Investors looking to benefit from the growing opportunities in the cannabis industry can look at some of the best cannabis to buy, which include Jazz Pharmaceuticals plc (NASDAQ:JAZZ), The Scotts Miracle-Gro Company (NYSE:SMG), and Tilray Brands, Inc. (NASDAQ:TLRY).
Photo by terre-di-cannabis on Unsplash
Our Methodology
To create our selection of the best cannabis stocks for investment, we began by assembling a roster of companies that are actively involved in the provision of cannabis and cannabis-related products. Subsequently, we identified the number of hedge funds that retained these stocks in their portfolios as of Q3 2023.
11. Leafly Holdings, Inc. (NASDAQ:LFLY)
Number of Hedge Fund Holders: 2
Leafly Holdings, Inc. (NASDAQ:LFLY) stands out as a premier platform in the cannabis industry, facilitating connections between consumers and local dispensaries, delivery services, and brands. Operating in 28 states and 10 countries, the company caters to a vast audience, drawing in over 125 million visitors each month. In addition, Leafly’s network encompasses 18,000 licensed cannabis businesses, solidifying its position as a comprehensive and widely utilized resource in the cannabis marketplace.
Leafly Holdings, Inc. (NASDAQ:LFLY) demonstrated robust financial performance in the second quarter of 2023. The company reported a revenue of $10.68 million, showcasing a noteworthy 29% year-over-year increase. Furthermore, the net loss of $1.44 million marked a significant 71% year-over-year decrease. Notably, these bottom-line results exceeded expectations, with Leafly Holdings, Inc. (NASDAQ:LFLY) consistently surpassing analysts’ estimates for earnings per share (EPS) over the past four quarters.
According to Insider Monkey’s third quarter database, 2 hedge funds were long Leafly Holdings, Inc. (NASDAQ:LFLY), compared to 4 funds in the preceding quarter.
Much like Jazz Pharmaceuticals plc (NASDAQ:JAZZ), The Scotts Miracle-Gro Company (NYSE:SMG), and Tilray Brands, Inc. (NASDAQ:TLRY), Leafly Holdings, Inc. (NASDAQ:LFLY) is one of the best cannabis stocks to look out for.
10. Village Farms International, Inc. (NASDAQ:VFF)
Number of Hedge Fund Holders: 4
Village Farms International, Inc. (NASDAQ:VFF) operates as a vertically integrated provider of plant-based consumer packaged goods in the cannabis and cannabidiol (CBD) sectors, serving markets in North America and select international regions. The company is organized into distinct segments, namely Produce, Cannabis Canada, Cannabis United States, and Energy.
The Vancouver-based agriculture company, specializing in controlled-environment farming, reported a net loss of $1.3 million, or $0.01 share, showing improvement from a loss of $12.3 million in the previous year. Although consolidated sales dipped by 2% to $69.5 million, the enhanced bottom line suggests positive outcomes from the company’s strategic shift towards higher-margin cannabis and recovery in the produce sector. Traditionally recognized for its produce, the company has redirected much of its growth strategy toward expanding its Canadian cannabis segment. The successful introduction of the Fraser Valley brand in Ontario has yielded positive results, capturing a considerable market share by targeting cost-conscious consumers amid industry-wide price compressions.
Israel Englander’s Millennium Management was a significant shareholder of the company at the end of the third quarter, holding 209,995 shares worth roughly $167,471. A total of 4 hedge funds were long the stock at the end of Q3.
9. Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM)
Number of Hedge Fund Holders: 6
Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) is actively involved in the production and distribution of equipment and supplies tailored for controlled environment agriculture in both the United States and Canada. The company’s extensive product line includes agricultural lighting devices, indoor climate control equipment, as well as nutrients and plant additives. These offerings are designed for the cultivation of diverse crops, spanning cannabis, flowers, fruits, plants, vegetables, grains, and herbs, all within controlled environments. Recognized as a leader in hydroponics, Hydrofarm presents itself as one of the best cannabis stocks in the industry.
In June of this year, Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) forged an exclusive strategic alliance with CEA Advisors, aiming to expedite their entry into the dynamic Controlled Environment Agriculture (CEA) sector, encompassing both food and non-food production. Hydrofarm’s commercial division, Innovative Growers Equipment (IGE), is designated as the North American hub for manufacturing and marketing Growtainers and Growracks. Situated in Sycamore, Illinois, IGE’s facility integrates manufacturing, research and development, and warehouse operations to cater to the global market.
According to Insider Monkey’s third quarter database, 6 hedge funds were bullish on Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM), compared to 5 funds in the prior quarter. Michael Zimmerman’s Prentice Capital Management is a significant position holder in the company, with 464,108 shares worth $566,212.
8. Aurora Cannabis Inc. (NASDAQ:ACB)
Number of Hedge Fund Holders: 7
Aurora Cannabis Inc. (NASDAQ:ACB) is a company that specializes in the production, distribution, and sale of cannabis and cannabis-derived products, operating both within Canada and on the international stage. The company has a dual focus on catering to both the medical and consumer segments of the cannabis market within Canada, reflecting a comprehensive approach to serving diverse needs and markets in the evolving cannabis industry.
In the second quarter of 2023, Aurora Cannabis Inc. (NASDAQ:ACB) reported a noteworthy financial turnaround, with earnings of $256,000 compared to a loss of $45.5 million in the same period the previous year. The Edmonton-based cannabis company revealed a substantial increase in net revenue for the quarter, reaching $63.4 million compared to $48.6 million in the corresponding quarter a year ago. Aurora Cannabis Inc. (NASDAQ:ACB) attributes this positive shift to the expansion of its global medical cannabis business and increased revenue in its plant propagation business. This indicates a strategic focus on both the medical sector and the plant propagation aspect of its operations, contributing to the company’s improved financial performance during the reported quarter.
According to Insider Monkey’s Q3 database, 7 hedge funds were bullish on Aurora Cannabis (NASDAQ:ACB), the same as the prior quarter. Israel Englander’s Millennium Management is a significant position holder in the company, with 1.62 million shares worth $949,839.
7. GrowGeneration Corp. (NASDAQ:GRWG)
Number of Hedge Fund Holders: 7
GrowGeneration Corp. (NASDAQ:GRWG) operating in the hydroponic and organic gardening retail sector in the United States, engages in the sale and marketing of various products, including nutrients, lighting, environmental control systems, and accessories for hydroponic gardening, catering to both indoor and outdoor growing needs. The primary customer base comprises commercial and urban cultivators involved in growing specialty crops such as organic greens and plant-based medicines.
GrowGeneration Corp. (NASDAQ:GRWG) released its earnings report for the third quarter of 2023 on November 8. In the third quarter, the company reported sales of $55.68 million, a decrease from $70.85 million recorded in the same period the previous year. On the other hand the company posted revenue of $55.7 million in the period, topping Street forecasts.
According to Insider Monkey’s data, 7 hedge funds were bullish on GrowGeneration Corp. (NASDAQ:GRWG) at the end of the third quarter of 2023, the same as the prior quarter. The collective stakes in Q3 2023 amounted to $3.23 million.
6. Cronos Group Inc. (NASDAQ:CRON)
Number of Hedge Fund Holders: 8
Cronos Group Inc. (NASDAQ:CRON) stands out as a notable force in the realm of cannabinoids, specializing in the creation and distribution of top-tier cannabis products within Canada and on a global scale. The company distinguishes itself by prioritizing the development of innovative technologies, brands, and formulations tailored for both medical and recreational markets. A noteworthy aspect of Cronos Group Inc. (NASDAQ:CRON) is its close association with Altria Group, a heavyweight in the tobacco industry, as it maintains a significant stake of approximately 41% in the company.
In the third quarter of 2023, Cronos Group Inc. (NASDAQ:CRON) reported a revenue of $24.8 million, reflecting a robust 22% year-on-year growth. This positive revenue trajectory is credited to the successful introduction of new products, a rise in sales volume, and a modest increase in prices. Notably, Cronos Group Inc. (NASDAQ:CRON) has demonstrated an impressive performance in the EPS category, consistently surpassing analysts’ expectations over the past three quarters. With a market capitalization of $712 million, Cronos Group Inc. (NASDAQ:CRON) holds a relatively higher position compared to some of its counterparts in the cannabis industry.
According to Insider Monkey’s third quarter database, 8 hedge funds were long Cronos Group Inc. (NASDAQ:CRON), compared to 6 funds in the last quarter. Traci Lerner’s Chescapmanager LLC held the biggest stake in the company, comprising 8.32 million shares worth $16.65 million.
In addition to Jazz Pharmaceuticals plc (NASDAQ:JAZZ), The Scotts Miracle-Gro Company (NYSE:SMG), and Tilray Brands, Inc. (NASDAQ:TLRY), Cronos Group Inc. (NASDAQ:CRON) ranks as one of the best cannabis stocks to buy now.
Click to continue reading and see the 5 Best Cannabis Stocks To Buy Now.
Suggested articles:
- 12 Best Small-Cap Biotech Stocks with Massive Potential According to Hedge Funds
- 10 Best Social Media Platforms For eCommerce
- 12 Stocks that Could Skyrocket According to Investment Newsletters
Disclosure. None. 11 Best Cannabis Stocks To Buy Now is originally published on Insider Monkey.
