In this article, we will be looking at the 12 best marijuana stocks to invest in.
The state of New York legalized the use of recreational cannabis, alongside expanding its medicinal use and decriminalizing the possession of smaller amounts of the drug on March 31st, 2021. Apart from New York, 18 other states, 2 territories, and the District of Columbia in the US have also legalized the use of marijuana to a certain extent, with Alaska and Arizona being among the 18 legalizers. With the White House turning Democrat, the government’s approach towards the marijuana sector is expected to turn friendly, leading to not only a social and political change in attitude but a financial one as well, as analysts and investors begin shifting their attention to marijuana stocks.
According to data from New Frontier, the legalized marijuana market was due to double to $41.5 billion by 2025. The Bloomberg Intelligence’s Global Cannabis Competitive Peers Index gained 33% after the recent pro-marijuana policies, right after the 45% increase in the fourth quarter of 2020. Tilray, Inc. (NASDAQ: TLRY) was the winner on the index in the first quarter of 2021, having gained over 170% and benefiting from retail investors snapping up its shares. Such trends are positive news for the cannabis industry in the US, with Green Acre Capital, a private cannabis investment fund, having commented this March that the cannabis market in the US would become an opportunity worth over $95 billion in the long run.
Canada and the US are both top contenders in the cannabis business, with both countries’ companies having a certain edge. Canadian rivals in the industry such as Tilray, Inc. and Canopy Growth Corporation (NASDAQ: CGC) among others reported sales growth of 52% by the end of 2020, compared to 2019 numbers. However, the Wall Street Journal reports that US companies are likelier to outshine their Canadian counterparts in the coming quarters, in light of the rapid legalization of marijuana and a bigger market for the drug existing in the country. Analysts, investors, and other major stakeholders in the industry seem optimistic about its growth as well. The CEO and co-founder of IM Cannabis Corp. commented that post-pandemic during the Democratic governance in the US, more positive attitudes towards further legalization of cannabis can be expected, while analyst firm Cowen also estimated that New York alone can expect to gain about $300 million in annualized tax revenue from recreational cannabis use. Finally, Curaleaf Holdings, Inc. (OTC: CURLF), a large American corporation operating in the cannabis sector, reported this year that over $200 million was invested in the company in fresh capital just this January.
The above serves to prove that the cannabis sector is set to become a highly lucrative investment opportunity, with companies like Altria Group, Inc. (NYSE: MO), Curaleaf Holdings, Inc., and Tilray, Inc. set to reap the benefits of this development. Thus, we have compiled a list of the best marijuana stocks to invest in.
The pandemic has made it harder to pinpoint the best stocks to invest in for long-term gains, as the entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, 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 124 percentage points since March 2017. Between March 2017 and May 28th, 2021, our monthly newsletter’s stock picks returned 206.8%, vs. 91.0% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16th. 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.
Without further ado, let’s look at the 12 best marijuana stocks to invest in. The stocks on our list were selected on the basis of hedge fund sentiment, analysts’ ratings, growth potential based on core business strengths, and fundamentals.
Best Marijuana Stocks to Invest In
12. ETFMG Alternative Harvest ETF (NYSE: MJ)
Number of Hedge Fund Holders: N/A
ETFMG Alternative Harvest ETF (NYSE: MJ) is an exchange-traded fund managed by ETF Managers Group LLC. The fund focuses its investments in public equity markets and stocks in healthcare, pharmaceuticals, legal cultivation of cannabis, biotechnology, and other sectors. It ranks 12th on our list of the best marijuana stocks to invest in.
This May, it was announced that ETFMG Alternative Harvest ETF’s (NYSE: MJ) managing company has launched yet another ETF, in light of the older ETF’s successes. ETFMG Alternative Harvest ETF has $1.85 billion in assets under management, and the fund’s price returns in the past year have been up 59.91%, versus the S&P 500’s 38.62%, while its total returns in the same time period have increased by 64.16%, versus the S&P 500’s total returns of 10.4%. ETFMG Alternative Harvest ETF has gained 38.49% in the past 6 months and year to date.
Like Altria Group, Inc., Curaleaf Holdings, Inc., and Tilray, Inc., ETFMG Alternative Harvest ETF is a good stock to invest in.
11. Curaleaf Holdings, Inc. (OTC: CURLF)
Number of Hedge Fund Holders: N/A
Curaleaf Holdings, Inc. is an integrated medical and wellness cannabis operating working in the US. The company has two segments: Cannabis Operations and Non-Cannabis Operations. It ranks 11th on our list of the best marijuana stocks to invest in.
This June, Curaleaf Holdings, Inc. announced a new strategic partnership between its Select brand and Rolling Stone to create industry-leading products for the cannabis market. In the first quarter of 2021, Curaleaf Holdings, Inc. had an EPS of -$0.02, beating estimates by $0.01, while its revenue was $260.32 million, up 169.77% year over year and beating estimates by $6.31 million. The company has a gross profit margin of 58.61% and its stock has gained 9.35% in the past 6 months and year to date.
10. Cresco Labs Inc. (OTC: CRLBF)
Number of Hedge Fund Holders: N/A
Cresco Labs Inc. (OTC: CRLBF) cultivates and manufactures retail and medical cannabis products in the US for sale. The company provides cannabis in flowers, vape pends, live resins, disposable pens, and other forms, and ranks 10th on our list of the best marijuana stocks to invest in.
In the first quarter of 2021, Cresco Labs Inc. had a revenue of $178.44 million, up 168.81% year over year and beating estimates by $7.46 million. The stock has gained 9.51% in the past 6 months and year to date and Cresco Labs Inc. has a gross profit margin of 65.68%.
Like Altria Group, Inc., Curaleaf Holdings, Inc., and Tilray, Inc., Cresco Labs Inc. is a good stock to invest in.
9. Sundial Growers Inc. (NASDAQ: SNDL)
Number of Hedge Fund Holders: 7
Sundial Growers Inc. (NASDAQ: SNDL) is a company producing cannabis products for the Canadian adult-use market. It produces inhalable products, like flower, pre-rolls, and vapes. The company ranks 9th on our list of the best marijuana stocks to invest in.
Sundial Growers Inc. has regained compliance with NASDAQ and will continue to be listed on the exchange, and this June, the stock was up 28%, faring much better than rival companies. The company was leading healthcare gainers in June as well. In the first quarter of 2021, Sundial Growers Inc. had an EPS of $0.0, beating estimates by $0.01, while its revenue was $8.18 million, missing estimates by $2.81 million. The stock has gained 72.55% in the past 6 months and year to date.
By the end of the first quarter of 2021, 7 hedge funds out of the 866 tracked by Insider Monkey held stakes in Sundial Growers Inc. worth roughly $18.8 million. This is compared to 2 hedge fund holders in the previous quarter with stakes worth roughly $2.72 million. Like Altria Group, Inc., Curaleaf Holdings, Inc., and Tilray, Inc., Sundial Growers Inc. is a good stock to invest in.
8. Village Farms International, Inc. (NASDAQ: VFF)
Number of Hedge Fund Holders: 8
Village Farms International, Inc. (NASDAQ: VFF) is a producer and distributor of greenhouse-grown tomatoes, bell peppers, and cucumbers in North America. The company also produces and supplies cannabis products under its Cannabis and Hemp Business segment. It ranks 8th on our list of the best marijuana stocks to invest in.
This May, the stock received positive responses after its announcement that the Toronto Stock Exchange (TSE) accepted its NCIB notice. The company will be able to purchase about 4.06 million of its own shares through this move. In the first quarter of 2021, Village Farms International, Inc. had an EPS of -$0.06, missing estimates by -$0.04. Its revenue was $52.62 million, up 63.3% year over year and beating estimates by $1.13 million, and it has a gross profit margin of 8.1%. Village Farms International, Inc. has gained 5.11% in the past 6 months and year to date.
By the end of the first quarter of 2021, 8 hedge funds out of the 866 tracked by Insider Monkey held stakes in Village Farms International, Inc.. The total value of their stakes was roughly $35.5 million. This is compared to 6 hedge fund managers in the previous quarter, with a total stake value of about $29.8 million. Like Altria Group, Inc., Curaleaf Holdings, Inc., and Tilray, Inc., Village Farms International, Inc. is a good stock to invest in.
7. HEXO Corp. (NYSE: HEXO)
Number of Hedge Fund Holders: 6
HEXO Corp. (NYSE: HEXO) is a producer and seller of cannabis in Canada. The company offers dried cannabis under the Time of Day and H2 lines, Elixir, a cannabis oil sublingual mist product line, and Decarb, a fine-milled cannabis powder product. It ranks 7th on our list of the best marijuana stocks to invest in.
On June 28th, HEXO Corp. completed its purchase of its first US production facility in Colorado, a move that solidified the cannabis producer’s presence in the US. In the fiscal third quarter of 2021, HEXO Corp. had an EPS of -$0.17, missing estimates by -$0.13. The company’s revenue was $18.66 million, up 14.86% year over year, but missing estimates by -$9.7 million, and it has a gross profit margin of 9.72%. The stock has gained 30.23% in the past 6 months and 33.79% year to date.
By the end of the first quarter of 2021, 6 hedge funds out of the 866 tracked by Insider Monkey held stakes in HEXO Corp. worth roughly $8.02 million. This is compared to 4 hedge fund holders in the previous quarter with stakes worth about $5.36 million. Like Altria Group, Inc., Curaleaf Holdings, Inc., and Tilray, Inc., HEXO Corp. is a good stock to invest in.
6. Canopy Growth Corporation (NASDAQ: CGC)
Number of Hedge Fund Holders: 12
Canopy Growth Corporation is a company working in the production and distribution of cannabis and hemp-based products for recreational and medical reasons in Canada, the US, and Germany. The company ranks 6th on our list of the best marijuana stocks to invest in.
This June, Canopy Growth Corporation acquired the Supreme Cannabis Company (OTC: SPRWF) for $435 million and has also sold a GMP medicinal cannabis cultivation facility in Denmark. The stock has also been upgraded from Neutral to Buy with a $44.55 price target with a 27% upside by MKM, in light of the Canadian economy reopening. In the fiscal fourth quarter of 2021, Canopy Growth Corporation had an EPS of -$1.33, missing estimates by -$1.14. The company’s revenue was $138.65 million, up 65.91% year over year, and beat estimates by $14.51 million. It has a gross profit margin of 17% and the stock has gained 46.81% in the past year.
By the end of the first quarter of 2021, 12 hedge funds out of the 866 tracked by Insider Monkey held stakes in Canopy Growth Corporation worth roughly $157 million. This is compared to 19 hedge fund holders in the previous quarter with stakes worth roughly $133 million. Like Altria Group, Inc., Curaleaf Holdings, Inc., and Tilray, Inc., Canopy Growth Corporation is a good stock to invest in.
5. Innovative Industrial Properties, Inc. (NYSE: IIPR)
Number of Hedge Fund Holders: 13
Innovative Industrial Properties, Inc. (NYSE: IIPR) is a corporation working on acquiring and managing specialized properties leased to state-licensed operators for regulated medical use of cannabis facilities. Despite not being a company producing marijuana, it is set to benefit from the steadily growing cannabis business since it is the main option for operators who want to scale production, since borrowing capital from banks is not possible because of cannabis being illegal at the federal level. The company ranks 5th on our list of the best marijuana stocks to invest in.
On June 15th, Innovative Industrial Properties, Inc. declared its quarterly dividend of $1.4 per share, a 6.1% increase from the prior $1.32 dividend. It will be payable on July 15th. Innovative Industrial Properties, Inc. has also acquired properties in Massachusetts, Michigan, and Pennsylvania this May. Innovative Industrial Properties, Inc. has estimated that regulated cannabis sales would reach about $45.9 billion by 2025, and this expansion in the business will result in growing demand for cannabis production infrastrucute, which the company can provide readily. Hence, it is set to benefit incredibly from the growth of the cannabis business. In the first quarter of 2021, Innovative Industrial Properties, Inc. had an FFO of $1.39 in line with estimates, while its revenue of $42.88 million, up 103.25% year over year, beat estimates by $1.22 million. The company has a gross profit margin of 96.31% and Innovative Industrial Properties, Inc. has gained 7.62% in the past 6 months and year to date.
By the end of the first quarter of 2021, 13 hedge funds out of the 866 tracked by Insider Monkey held stakes in Innovative Industrial Properties, Inc., worth about $192 million. This is compared to 23 hedge fund holders in the previous quarter, holding stakes worth roughly $317 million.
4. Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
Number of Hedge Fund Holders: 14
Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) is a manufacturer and distributor of controlled environment agriculture equipment and supplies in the US and Canada. The company offers plant additives that can be used to grow, farm, and cultivate cannabis as well. It ranks 4th on our list of the best marijuana stocks to invest in.
This June, Hydrofarm Holdings Group, Inc. announced that it would be acquiring Aurora Innovations in a $161 million deal. The stock has also acquired House & Garden in May, which had lead to it surging by 4% in light of the news. In the first quarter of 2021, Hydrofarm Holdings Group, Inc. had an EPS of $0.19, beating estimates by $0.07. The company’s revenue was $111.39 million, beating estimates by $2.62 million, and it has a gross profit margin of 19.47%. The stock has gained 1.44% in the past 6 months and year to date.
By the end of the first quarter of 2021, 14 hedge funds out of the 866 tracked by Insider Monkey held stakes in Hydrofarm Holdings Group, Inc., worth about $84.3 million. This is compared to 19 hedge fund holders in the previous quarter, holding stakes worth roughly $117 million.
Madison Funds, an investment management firm, mentioned Hydrofarm Holdings Group, Inc. in its first-quarter 2021 investor letter. Here’s what they said:
“We also initiated a position in Hydrofarm in the first quarter. Hydrofarm distributes lighting, nutrients and grow media for controlled environment agriculture, specifically for the cultivation of cannabis and related products. Hydrofarm’s customers are fragmented. There are over 1,500 hydroponic retailers in the U.S. and Canada. The runway for revenue growth is large as more and more states legalize recreational and medical use cannabis. Today about 60% of the population does not have access to recreational use cannabis which represents a massive growth opportunity.”
3. GrowGeneration Corp. (NASDAQ: GRWG)
Number of Hedge Fund Holders: 18
GrowGeneration Corp. (NASDAQ: GRWG) owns and operates retail hydroponic and organic gardening stores in the US. The company’s products include horticultural, organics, and lighting, and hydroponic items among others, and it ranks 3rd on our list of the best marijuana stocks to invest in.
This May, GrowGeneration Corp. announced its expansion into the Californian market after it acquired the Harvest Company. The stock also gained 13% in light of three consecutive Buy upgrades in May, from Ladenburg Thalmann, Alliance Global, and Roth Capital. Ladenburg Thalmann gave GrowGeneration Corp. a price target of $45 with a 27% upside while the other two firms gave price targets of $55 with a 55% upside. In the first quarter of 2021, GrowGeneration Corp. had an EPS of $0.1, beating estimates by $0.03. The company’s revenue was $90.02 million was up 172.95% year over year and beat estimates by $3.66 million, and it has a gross profit margin of 26.95%. The stock has gained 22.28% in the past 6 months and year to date.
By the end of the first quarter of 2021, 18 hedge funds out of the 866 tracked by Insider Monkey held stakes in GrowGeneration Corp., worth about $127 million. This is compared to 18 hedge fund holders in the previous quarter, holding stakes worth roughly $142 million.
2. Tilray, Inc. (NASDAQ: TLRY)
Number of Hedge Fund Holders: 21
Tilray, Inc. is a pharmaceutical company operating in Canada and the US. The company is also involved in the cannabis market and ranks 2nd on our list of the best marijuana stocks to invest in.
Bank of America analyst Heather Balsky seems optimistic on Tilray, Inc. and its entry into the American market, as she mentioned that the company’s move to add about $4.5 billion of war chest could indicate its preparation for the legalization of cannabis in the US. The analyst reiterated BofA’s Buy rating on the stock, alongside a price target of $21.5 per share, indicating a 20.4% upside. This June, the company also announced SweetWater Brewing’s new product collaboration with Broken Coast Cannabis Ltd., which operates under Tilray, Inc.. This marks the latter’s first cannabis brand introduction in the US. The stock has gained 99.06% in the past 6 months and year to date
By the end of the first quarter of 2021, 21 hedge funds out of the 866 tracked by Insider Monkey held stakes in Tilray, Inc., worth about $257 million. This is compared to 17 hedge fund holders in the previous quarter, holding stakes worth roughly $47.6 million.
1. Altria Group, Inc. (NYSE: MO)
Number of Hedge Fund Holders: 38
Altria Group, Inc. is a manufacturer of cigarettes, oral tobacco products, and wine in the US. The company’s brands include Marlboro, Black & Mild, Copenhagen, Skoal, Red Seal, and Husky. It has taken a $1.8 billion stake in the cannabis business through investing in Cronos Group Inc. (NASDAQ: CRON), a major multinational Canadian cannabis company, and has added cannabis technology to its portfolio this year, including patented marijuana vaporizers. The company ranks 1st on our list of the best marijuana stocks to invest in.
According to Morgan Stanley this month, Altria Group, Inc. is set to have only an upside after the FTC administrative trial. The firm retained its Overweight rating and $52 price target on the company. In the first quarter of 2021, Altria Group, Inc. had an EPS of $1.07, beating estimates by $0.02, while its $4.88 billion revenue missed estimates by $108.51 million. The company has a gross profit margin of 65.28%. Additionally, the stock has a forward PE ratio of 10.39 and has gained 16.75% in the past 6 months and year to date.
By the end of the first quarter of 2021, 38 hedge funds out of the 866 tracked by Insider Monkey held stakes in Altria Group, Inc., worth about $1.1 billion. This is compared to 37 hedge fund holders in the previous quarter, holding stakes worth roughly $1.08 billion.
Oakmark Funds, an investment management firm, mentioned Altria Group, Inc. in their first quarter 2021 investor letter. Here’s what they said:
“We initiated a new position in Altria, which commands roughly 50% of the cigarette and smokeless tobacco market in the U.S. Both of these markets are duopolies that we believe have exhibited strong pricing power over time. While the shares trade at a low multiple of reported earnings, Altria also owns valuable stakes in other non-core businesses, including ~10% of AB InBev, 35% of Juul and 45% of Cronos. Excluding the values of these stakes and their respective earnings contribution, we were able to purchase shares of Altria for less than seven times our estimate of next year’s earnings. This compares to other consumer brands with less favorable earnings growth profiles that trade for three times Altria’s multiple. The company also has several promising reduced-risk products that may appeal to tobacco users, including On! and iQOS. We believe these products position the company well to help consumers slowly transition to a tobacco-free future. We expect management to return the vast majority of future earnings to shareholders given the company’s strong balance sheet, high free cash flow conversion and limited capital requirements.”
See also 10 Best Healthcare Dividend Stocks and 12 Best Telemedicine Stocks To Buy.
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