In this article, we will be looking at the 11 best hemp stocks to buy now.
With the growing acceptance of cannabis among American and global consumers leading to an increase in sales and legalization after the 2018 Farm Bill, the industrial hemp market has experienced vast growth, as analysts and investors brought their attention to hemp stocks. Often confused for marijuana, on account of both plants containing tetrahydrocannabinol (THC) and being classified as cannabis, hemp yields lower amounts of the psychoactive compound compared to the likes of marijuana, thus having negligible effect. As such, the plant is not known as a recreational drug, but rather as a sustainable and profitable crop due to its many medical, structural and dietary uses.
The hemp industry is booming, as government and private grants provide significant funding towards the research and applications of the crop. The U.S Department of Agriculture’s $10 million grant this year was among the most notable. The COVID-19 pandemic affected many industries due to repeated lockdowns. However, the hemp industry was among the few that managed to stay afloat despite the economic recession. According to a report, the global industrial hemp market attained a value of approximately $4.7 billion back in 2020. Aided by the introduction of favorable regulations, largely in the United States due to the Democratic government, the market is projected to further grow at a CAGR of 22.5% between 2021 and 2026 to reach a value of $14.6 billion by 2026. Additionally, sales of hemp-based products are expected to reach $2.61 billion by 2022, based on data provided by Statista.
The above serves to prove that the hemp industry is set to become a highly lucrative investment opportunity, with companies like Altria Group, Inc. (NYSE:MO), Philip Morris International Inc. (NYSE:PM), and Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) ready to rake in the benefits due to this development.
Our Methodology
Let us now analyze our list of the 11 best hemp stocks to buy now. For our list, we chose stocks based on positive analysts’ ratings and their performance in the hemp industry, ranking them according to the number of hedge funds that held stakes in the company.
Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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11 Best Hemp Stocks To Buy Now
11. Aurora Cannabis Inc. (NASDAQ:ACB)
Number of Hedge Fund Holders: 9
Aurora Cannabis Inc. (NASDAQ:ACB) starts off our list of the 11 best hemp stocks to buy now. A Canadian distributor of a variety of cannabis-based products, the company is headquartered in Edmonton and has operations in over 25 countries.
On September 29, Aurora Cannabis Inc. launched its Bidiol product, the first medical cannabis oil in Uruguay that is wholly produced domestically. The company’s strategy in Uruguay focuses exclusively on medical cannabis, with the aim of making the country its continental center of production and distribution. Its operations in Uruguay includes one of the only GMP certified cannabis processing facilities in the country.
At the end of the second quarter of 2021, 9 hedge funds in the database of Insider Monkey held stakes worth $62 million in Aurora Cannabis Inc., down from 12 the preceding quarter worth $48 million. Ken Griffin of Citadel Investment Group is a leading stakeholder in the company, with 988,342 shares worth $8.9 million.
10. Sundial Growers Inc. (NASDAQ:SNDL)
Number of Hedge Fund Holders: 10
Sundial Growers Inc. (NASDAQ: SNDL) is a company engaged in the production and distribution of cannabis and hemp products.
By the end of the second quarter of 2021, 10 hedge funds out of the 873 tracked by Insider Monkey held stakes in Sundial Growers Inc. worth roughly $76.5 million. This is compared to 7 hedge fund holders in the previous quarter with stakes worth roughly $1.88 million.
Out of the hedge funds being tracked by Insider Monkey, Jim Simons’ Renaissance Technologies is a leading shareholder of Sundial Growers Inc., with over 70.9 million shares worth more than $67.3 million.
ATB Capital analyst David Kideckel remains bullish on Sundial Growers Inc., upgrading it to Sector Perform from Underperform, with a price target of $0.8, up from $0.5.
In addition to Altria Group, Inc., Philip Morris International Inc., and Arena Pharmaceuticals, Inc., Sundial Growers Inc. is a notable stock to buy.
9. Innovative Industrial Properties, Inc. (NYSE:IIPR)
Number of Hedge Fund Holders: 15
Innovative Industrial Properties, Inc. (NYSE:IIPR) is a California-based company focused on the acquisition, ownership and management of industrial properties for their regulated cannabis and hemp facilities. The firm ranks ninth on our list of the 11 best hemp stocks to buy now.
On September 1, BTIG analyst Thomas Catherwood raised the price target on Innovative Industrial Properties, Inc. to $290 from $245, and kept a Buy rating on the shares of the company.
As of the end of the second quarter, 15 hedge funds tracked by Insider Monkey reported owning stakes in Innovative Industrial Properties, Inc.. The total worth of these stakes is $200.8 million. This shows the hedge fund sentiment is positive for the company as 13 funds held stakes in the previous quarter, having a total worth of $192.6 million. Stuart Zimmer of Zimmer Partners is a leading shareholder in the company.
8. Canopy Growth Corporation (NASDAQ:CGC)
Number of Hedge Fund Holders: 16
7. Tilray, Inc. (NASDAQ:TLRY)
Number of Hedge Fund Holders: 17
Tilray, Inc. (NASDAQ: TLRY) is a pharmaceutical company involved in the cannabis and industrial hemp markets. With operations in both the United States and Canada the company ranks seventh on our list of the 11 best hemp stocks to buy now. The firm’s stock has gained 16% on a year to date basis.
On August 18, BMO Capital analyst Tamy Chen kept a Market Perform rating, as well as a price target of $14 on Tilray, Inc. shares.
On October 26, Tilray, Inc. (NASDAQ:TLRY) was selected by the Luxembourg Ministry of Health as a supplier of Good Manufacturing Practice (GMP) certified medical cannabis products for the country’s medical cannabis program.
By the end of the second quarter of 2021, 17 hedge funds out of the 873 tracked by Insider Monkey held stakes in Tilray, Inc., worth about $94.8 million. This is compared to 21 hedge fund holders in the preceding quarter.
Out of the hedge funds being tracked by Insider Monkey, Israel Englander’s Millennium Management is among the leading shareholders of the company, with 815,064 shares worth more than $14.7 million.
Much like Altria Group, Inc., Philip Morris International Inc., and Arena Pharmaceuticals, Inc., Tilray, Inc. is a notable stock to buy.
6. GrowGeneration Corp. (NASDAQ:GRWG)
Number of Hedge Fund Holders: 17
GrowGeneration Corp. (NASDAQ:GRWG) owns and operates specialty retail hydroponic and organic gardening stores, with products including horticultural, hydroponic and organic items among others. Ranked sixth on our list of the 11 best hemp stocks to buy, GrowGeneraton Corp. has a market capitalization of $1.31 billion.
On September 27, Lake Street analyst Mark Smith reiterated a Buy rating on GrowGeneration Corp., alongside a $63 price target on the company’s shares.
As of the end of the second quarter, 17 hedge funds tracked by Insider Monkey reported owning stakes in GrowGeneration Corp.. The total worth of these stakes amounts to $128.6 million. This is compared to 18 funds that had stakes in the company in the previous quarter, with a total worth of $127 million. Richard Dreihaus of Dreihaus Capital is the leading shareholder in the company.
5. Turning Point Brands, Inc. (NYSE:TPB)
Number of Hedge Fund Holders: 30
Turning Point Brands, Inc. (NYSE: TPB) is a leading manufacturer, marketer and distributor of branded consumer products including alternative smoking accessories and hemp-based products. Founded in 2004, the company is ranked fifth on the list of the 11 best hemp stocks to buy now.
On October 27, Craig-Hallum analyst Eric Des Lauriers maintained a Buy rating on Turning Point Brands, Inc. alongside a $65 price target on its shares.
Of the 873 elite funds tracked by Insider Monkey, 30 were long Turning Point Brands, Inc. at the end of June, up from 25 in the first quarter of 2021. DG Capital Management is the leading stakeholder of the company.
In the Q2 2021 investor letter of Kinsman Oak Capital Partners, the fund mentioned Turning Point Brands, Inc.. Here is what the fund said:
“TPB continues to be a volatile stock, but business execution has been admirable since we first initiated our position. The company has put forth consecutive beat and raise quarters, announced a few tuck-in acquisitions, and recently promoted a new CFO. We view these developments as positives for the stock. We believe TPB remains undervalued at ~14x FY22 EPS and ~10x FY22 EBITDA.”
4. Jazz Pharmaceuticals plc (NASDAQ:JAZZ)
Number of Hedge Fund Holders: 34
Ireland-based Jazz Pharmaceuticals plc (NASDAQ:JAZZ) ranks fourth on our list of the 11 best hemp stocks to buy now. The company operates as a specialty cannabis and hemp-based biopharmaceutical company. In May, the company acquired GW Pharmaceuticals (NASDAQ:GWPH) for $7.6 billion.
On October 6, Jefferies analyst Akash Tewari assumed coverage of Jazz Pharmaceuticals plc (NASDAQ:JAZZ) with a Buy rating and $172 price target on the company’s shares.
In the second quarter of 2021, Jazz Pharmaceuticals plc (NASDAQ: JAZZ) had an EPS of $3.90, beating estimates by $0.45. The company’s second quarter revenue came in at $751.81 million, surpassing predictions by $14.51 million.
At the end of the second quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $1.49 billion in Jazz Pharmaceuticals plc (NASDAQ: JAZZ). This is compared to 37 in the preceding quarter worth $1.26 billion.
Out of the hedge funds being tracked by Insider Monkey, investment firm Audrey Capital Management is a leading shareholder in Jazz Pharmaceuticals plc (NASDAQ:JAZZ), with 2,805 shares worth more than $498 million.
3. Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)
Number of Hedge Fund Holders: 34
Arena Pharmaceuticals, Inc. is a biotech company that is involved in the manufacture of cannabis and hemp oil products. Ranked third on our list of the 11 best hemp stocks to buy now, Arena Pharmaceuticals, Inc. has a market capitalization of $3.89 billion.
Earlier this August, Cantor Fitzgerald analyst Alethia Young kept a price target of $93 on Arena Pharmaceuticals, Inc. alongside an Overweight rating on the shares of the company.
After the FDA issued a black box warning of JAK inhibitors earlier this September, Arena Pharmaceuticals, Inc.’s share price has rallied sharply. The growth is largely attributed to its oral selective S1P receptor modulator called, known as Etrasimod.
By the end of the second quarter of 2021, 34 hedge funds out of the 873 tracked by Insider Monkey held stakes in Arena Pharmaceuticals, Inc. worth about $756.6 million. This is compared to 33 hedge fund holders in the preceding quarter, holding stakes worth roughly $822.5 million. The firm reported an EPS of -$2.40 for the same quarter.
Out of the hedge funds being tracked by Insider Monkey, Kurt Emster’s VenBio Select Advisor is a leading shareholder of Arena Pharmaceuticals, Inc., with over 4 million shares worth more than $277.9 million.
2. Philip Morris International, Inc. (NYSE:PM)
Number of Hedge Fund Holders: 46
Philip Morris International, Inc. is a multinational tobacco and hemp product manufacturing company based in New York. The most famous of the company’s products include Marlboro cigarettes. The Swiss-American company comes in at second on our list of the 11 best hemp stocks to buy now.
Terry Smith of Fundsmith LLP is one of the biggest stakeholders of Philip Morris International, Inc. as of the end of the second quarter, according to the data tracked by Insider Monkey. Overall, 46 funds were bullish on the company by the end of the June quarter, compared to 48 in the previous quarter.
Earlier on August 19, Deutsche Bank analyst Gerry Gallagher raised his price target on Philip Morris International, Inc. to $120 from $114, and kept a Buy rating on the shares.
1. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 47
Altria Group, Inc. is one of the world’s largest producers and marketers of tobacco, cigarettes, and more recently due to a strategic investment in Cronos Group (NASDAQ:CRON), cannabis and hemp-related products.
On September 30, Bank of America analyst Lisa Lewandowski maintained Buy ratings on Altria Group, Inc., despite setbacks due to the ban of IQOS tobacco sticks.
By the end of the second quarter of 2021, 47 hedge funds out of the 873 tracked by Insider Monkey held stakes in Altria Group, Inc. worth roughly $948 million. This is compared to 38 hedge funds in the previous quarter with a total stake value of approximately $1.1 billion.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based Harris Associates is a leading shareholder in Altria Group, Inc. (NYS:MO), with over 5.1 million shares worth more than $243.3 million.
In the Q2 2021 investor letter of Broyhill Asset Management, the fund mentioned Altria Group, Inc.. Here is what the fund had to say:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
See also 10 Best Healthcare Dividend Stocks and 12 Best Telemedicine Stocks To Buy.
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This article is originally published at Insider Monkey.
