In this article, we will take a look at the 10 best CBD stocks to invest in.
With the increase of sales, legalization, and medical and recreational benefits, the cannabis industry has proven its resilience and managed to grow in the face of the COVID-19 pandemic. As a result, there is a growing market for cannabidiol compounds. Cannabidiol, or CBD in short, is a constituent of the cannabis plant developed for medical use as it is not psychoactive, meaning it doesn’t get people high. In 2020, the CBD market reached approximately $14.9 billion in sales in the US.
On July 14, Senate Majority Leader Chuck Schumer, Senate Finance Committee Chairman Ron Wyden, and Sen. Cory Booker advocated eliminating cannabis from the Controlled Substances Act, causing US and Canadian cannabis stocks to rise. If passed, the bill would make it easier for private cannabis companies to go public in the United States, either by giving banks more leniency or ending the prohibition of marijuana. Meanwhile, President Joe Biden said that he backed decriminalizing marijuana but that more research on its long-term effects is needed before it could be legalized.
Among the American cannabis companies that soared on the announcement day were Cresco Labs Inc. (OTC: CRLBF) and Curaleaf Holdings, Inc. (OTC: CURLF), which jumped 3.9% and 2.2%, respectively. US-based medical marijuana companies Cresco Labs Inc. (OTC: CRLBF) and Curaleaf Holdings, Inc. (OTC: CURLF) are also among the existing marijuana dispensaries that have been granted a license in New York, where licensed marijuana companies are permitted to expand their marijuana businesses to four additional dispensaries on top of the existing four, with three of the eight being approved for recreational sales. On July 7, Jefferies analyst Owen Bennett gave a bullish rating on Curaleaf Holdings, Inc. (OTC: CURLF) where he initiated a Buy rating for the stock and set a price target of C$32 per share.
New York is now among the 18 states in the US that legalized recreational marijuana after Governor Andrew Cuomo signed the bill on March 31. According to Viridian Capital Advisors, New York be the most significant cannabis market on the East Coast, with sales expected to reach $1.9 billion by 2025.
Should You Invest in CBD Stocks?
According to a report from the BDSA, the cannabis sector had a breakout year in 2020, with global marijuana sales hitting approximately $21.3 billion, up 45% from $14.4 billion in 2019. In the US market, cannabis sales climbed 46% year over year to $17.5 billion in 2020. The sector shows no sign of stopping its growth as global cannabis sales are projected to grow at a compound annual rate of 17 percent to $55.9 billion by 2026, according to BDSA.
With this positive outlook, investors are optimistic about the cannabis industry. Analysts are bullish on CBD stocks like Jazz Pharmaceuticals plc (NASDAQ: JAZZ) and Tilray, Inc. (NASDAQ: TLRY). After completing its $7.2 billion acquisition of GW Pharmaceuticals, investors and analysts keep an eye on Jazz Pharmaceuticals (NASDAQ: JAZZ). On July 15, JPMorgan analyst Jessica Fye maintained an Overweight rating on Jazz Pharmaceuticals (NASDAQ: JAZZ) with a price target of $200 per share.
On the other hand, RBC Capital analyst Daniel Busby maintained an Outperform rating on Jazz Pharmaceuticals plc (NASDAQ: JAZZ) on July 23, increasing the price target to $216 per share from 190 previously. The analyst stated that the company’s FDA-approved Rylaze for acute lymphoblastic leukemia and lymphoblastic lymphoma treatment is a potential growth driver. Shares of Jazz Pharmaceuticals plc (NASDAQ: JAZZ) increased 6% in the last three months and gained 52% in the previous year.
Canadian medical cannabis and cannabinoid producer Tilray, Inc. (NASDAQ: TLRY) is another notable marijuana stock analysts are bullish about. The stock has gained 94% year to date and 10% in the last five days. In May, Jefferies analyst Owen Bennett upgraded Tilray, Inc. (NASDAQ: TLRY) to a Buy rating and increased the firm’s price target to $23 per share. According to the analyst, following its merger with Ontario-based medical marijuana producer Aphria Inc., the marijuana firm is now among the most prominent leaders in the Canadian industry. It also has potential in the US market. On July 27, Cantor Fitzgerald analyst Pablo Zuanic maintained an Overweight rating on Tilray, Inc. (NASDAQ: TLRY) and a price target of $19 per share.
To pick the best CBD stocks for this article, we took into account fundamentals, analyst ratings, future outlook and hedge fund sentiment for some of the most notable CBD stocks in the world. Why pay attention to hedge fund sentiment? 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 29, 2021, our monthly newsletter’s stock picks returned 206.8%, vs. 91% for the SPY. Our stock picks outperformed the market by more than 115 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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Let’s now look at the 10 best CBD stocks to invest in.
10 Best CBD Stocks to Invest In
10. OrganiGram Holdings Inc. (NASDAQ: OGI)
Number of Hedge Fund Holders: N/A
We start our list of the 10 best CBD stocks to invest in cannabis producer OrganiGram Holdings Inc. (NASDAQ: OGI). The Canadian weed company manufactures medical and recreational cannabis and CBD products. OrganiGram Holdings Inc. (NASDAQ: OGI) owns a 14-acre facility where the company grows its cannabis.
OrganiGram Holdings Inc. (NASDAQ: OGI) stock increased 2.38% in the last five days after the cannabis company published solid Q3 results, including a 31% increase in gross revenue and a 13% increase in net revenue year over year. On July 14, CIBC analyst John Zamparo reiterated a Neutral rating on OrganiGram Holdings Inc. (NASDAQ: OGI) and increased the price target to C$4 per share from C$3.75 previously.
The company has a market cap of $771 million. In the third quarter of 2021, OrganiGram Holdings Inc. (NASDAQ: OGI) had an EPS of -$0.01, beating estimates by $0.02. The company’s third-quarter revenue was $16.24 million, beating revenue estimates by $2.89 million. The stock has gained 94% in the last twelve months.
Just like Jazz Pharmaceuticals plc (NASDAQ: JAZZ), Tilray, Inc. (NASDAQ: TLRY), Cresco Labs Inc. (OTC: CRLBF), and Curaleaf Holdings, Inc. (OTC: CURLF), OrganiGram Holdings Inc. (NASDAQ: OGI) is one of the best CBD stocks to invest in according to market analysts.
9. Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE)
Number of Hedge Fund Holders: 6
Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE) ranks 9th on the list of 10 best CBD stocks to invest in. The Pennsylvania-based clinical-stage pharmaceutical firm develops transdermal CBD medications for chronic neuropsychiatric disorders.
In May, Cantor Fitzgerald analyst Charles Duncan maintained an Overweight rating on Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE) and increased the price target to $8 per share from $6 previously. According to the analyst, Zygel, the company’s transdermal CBD medication is headed to a more recognizable path to being used as a medication for Autism Spectrum Disorder and Fragile X Syndrome.
The company has a market cap of $187 million. In the first quarter of 2021, Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE) had an EPS of -$0.20, beating estimates by $0.05. At the end of the first quarter, the company had cash of $93.1 million, up from $59.2 million in the fourth quarter of 2020. Shares of Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE) increased 37% 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 Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE) worth roughly $3.47 million.
Just like Jazz Pharmaceuticals plc (NASDAQ: JAZZ), Tilray, Inc. (NASDAQ: TLRY), Cresco Labs Inc. (OTC: CRLBF), and Curaleaf Holdings, Inc. (OTC: CURLF), Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE) is one of the best CBD stocks to invest in according to market analysts.
8. Sundial Growers Inc. (NASDAQ: SNDL)
Number of Hedge Fund Holders: 7
Sundial Growers Inc. (NASDAQ: SNDL) ranks 8th on the list of 10 best CBD stocks to invest in. The Calgary-based cannabis company commercializes adult-use cannabis products in Canada and makes loans to other marijuana companies. In May, Sundial Growers Inc. (NASDAQ: SNDL)
On July 20, ATB Capital analyst David Kideckel upgraded Sundial Growers Inc. (NASDAQ: SNDL) to a Sector Perform from Underperform and increased the price target to $0.80 per share from $0.50 previously, after the company closed its CA$131 million acquisition of cannabis retailer Inner Spirit Holdings Ltd. Shares of Sundial Growers Inc. (NASDAQ: SNDL) increased 1.14% in the previous five days.
The company has a market cap of $1.51 billion. In the first quarter of 2021, Sundial Growers Inc. (NASDAQ: SNDL) had an EPS of -0.00, beating estimates by $0.01. The company’s gross cannabis revenue was $11.75 million in the first quarter, down 29% year over year. Sundial Growers Inc. (NASDAQ: SNDL) has gained over 72% 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. (NASDAQ: SNDL) worth roughly $18.8 million. This is compared to 2 hedge funds in the previous quarter with stakes worth about $2.72 million.
Just like Jazz Pharmaceuticals plc (NASDAQ: JAZZ), Tilray, Inc. (NASDAQ: TLRY), Cresco Labs Inc. (OTC: CRLBF), and Curaleaf Holdings, Inc. (OTC: CURLF), Sundial Growers Inc. (NASDAQ: SNDL) is one of the best CBD stocks to invest in according to market analysts.
7. Village Farms International, Inc. (NASDAQ: VFF)
Number of Hedge Fund Holders: 8
Village Farms International, Inc. (NASDAQ: VFF) ranks 7th on the list of 10 best CBD stocks to invest in. The Canadian company grows different plant-based products in its vertically integrated greenhouse facility in Delta, Canada. Village Farms International, Inc. (NASDAQ: VFF) operates cannabis and hemp business through its subsidiary Pure Sunfarms.
On July 21, Stifel analyst Andrew Partheniou maintained a Buy rating on Village Farms International, Inc. (NASDAQ: VFF) and increased the stock’s price target to C$22.50 per share from C$22 previously. The stock has gained 5.04% in the last five days. Earlier this month Pure Sunfarms obtained license approval from Health Canada for its 1.1 million square ft Delta 2 cannabis facility, bringing its total cultivation capacity to 1.65 million square ft. Shares of Village Farms International, Inc. (NASDAQ: VFF) increased 5.04% in the last five days.
The company has a market cap of $779 million. In the first quarter of 2021, Village Farms International, Inc. (NASDAQ: VFF) an EPS of -$0.06, missing estimates by -$0.04. The company’s revenue for the first quarter came in at $52.6 million, beating revenue estimates by $1.13 million. The stock has gained 61% in the past twelve months.
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. (NASDAQ: VFF) worth roughly $35.5 million. This is compared to 6 hedge funds in the previous quarter with stakes worth about $29.8 million.
Just like Jazz Pharmaceuticals plc (NASDAQ: JAZZ), Tilray, Inc. (NASDAQ: TLRY), Cresco Labs Inc. (OTC: CRLBF), and Curaleaf Holdings, Inc. (OTC: CURLF), Village Farms International, Inc. (NASDAQ: VFF) is one of the best CBD stocks to invest in according to market analysts.
6. Innovative Industrial Properties, Inc. (NYSE: IIPR)
Number of Hedge Fund Holders: 13
Innovative Industrial Properties, Inc. (NYSE: IIPR) ranks 6th on the list of 10 best CBD stocks to invest in. The San Diego-based company is a real estate investment trust (REIT) that manages medicinal cannabis facilities in the United States.
On July 2, analyst Andrew Rosivach of Wolfe Research began coverage of Innovative Industrial Properties, Inc. (NYSE: IIPR) with an Outperform rating and $249 per share price target. The stock has gained 9% in the previous month as the company declared a quarterly dividend increase of 6.1% to $1.40 per share, up from $1.32 previously.
The company has a market cap of $5.1 billion. In the second quarter of 2021, Innovative Industrial Properties, Inc. (NYSE: IIPR) had an EPS of $1.05, beating estimates by $0.09. The company’s first-quarter revenue came in at $42.8 million, increasing 103% year over year and beating estimates by $1.22 million. The company acquired four properties in the second quarter in Pennsylvania, Michigan, and Massachusetts. As of July 6, Innovative Industrial Properties, Inc. (NYSE: IIPR) owned and leased 72 medical marijuana facilities across 18 states in the US. Shares of Innovative Industrial Properties, Inc. (NYSE: IIPR) increased 17% in the last three months.
At the end of the first quarter of 2021, 13 hedge funds in the database of Insider Monkey held stakes worth $192 million in Innovative Industrial Properties, Inc. (NYSE: IIPR), down from 23 in the preceding quarter worth $317 million.
Just like Jazz Pharmaceuticals plc (NASDAQ: JAZZ), Tilray, Inc. (NASDAQ: TLRY), Cresco Labs Inc. (OTC: CRLBF), and Curaleaf Holdings, Inc. (OTC: CURLF), Innovative Industrial Properties, Inc. (NYSE: IIPR) is one of the best CBD stocks to invest in according to market analysts.
5. Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
Number of Hedge Fund Holders: 14
Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) ranks 5th on the list of 10 best CBD stocks to invest in. The Pennsylvania-based firm sells agricultural products used in controlled environments throughout the United States and Canada.
UBS analyst Peter Grom started coverage on Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) with a Buy rating on July 23, with a price target of $66 per share, stating that the company poises a conservative near-term outlook owing to global inflation but would be more bullish after 2021. Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) is expected to expand its revenue by 34% annually between 2020 and 2023, according to UBS.
Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) went on an acquisition spree in the last three months, acquiring plant nutrient producer House & Garden for $125 million and nutrient manufacturer Heavy 16 for $78.1 million May. In June, the company announced to purchase organic hydroponic products supplier Aurora Innovations for $161 million.
The company has a market cap of $1.97 billion. In the first quarter of 2021, Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) had an EPS of $0.19, beating estimates by $0.10. The company’s first-quarter revenue came in at $111.4 million, beating estimates by $2.62 million.
At the end of the first quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $84 million in Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM), down from 19 in the preceding quarter worth $117 million.
In its Q1 2021 investor letter, Madison Small Cap Fund mentioned Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) and shared their insights on the company. Here is what the fund 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 the recreational and medical use of cannabis. Today about 60% of the population does not have access to recreational use cannabis which represents a massive growth opportunity.”
4. Cara Therapeutics, Inc. (NASDAQ: CARA)
Number of Hedge Fund Holders: 17
Cara Therapeutics, Inc. (NASDAQ: CARA) ranks 4th on the list of 10 best CBD stocks to invest in. The biotech company based in Connecticut created an orally induced cannabinoid-based medicine to treat inflammatory and neuropathic pain.
On April 29, Needham analysts maintained a Buy rating on Cara Therapeutics, Inc. (NASDAQ: CARA) with a price target of $26 per share. The company has a market cap of $604 million. In the first quarter of 2021, Cara Therapeutics, Inc. (NASDAQ: CARA) had an EPS of -$0.47, beating estimates by $0.12. The company’s first-quarter revenue came in at $1.94 million.
At the end of the first quarter of 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $153 million in Cara Therapeutics, Inc. (NASDAQ: CARA), up from 15 in the preceding quarter worth $97.6 million.
3. GrowGeneration Corp. (NASDAQ: GRWG)
Number of Hedge Fund Holders: 18
GrowGeneration Corp. (NASDAQ: GRWG) ranks 3rd on the list of 10 best CBD stocks to invest in. The company owns 57 retail hydroponic and organic garden stores across 12 states in the US. GrowGeneration Corp. (NASDAQ: GRWG) also operates an e-commerce business where the company markets advanced lighting technology, hydroponic equipment, and soil and nutrients to cultivators, both commercial and home growers.
On July 20, Lake Street analyst Mark Smith maintained a Buy rating on GrowGeneration Corp. (NASDAQ: GRWG) with a price target of $77 per share after the company announced the acquisition of Oregon-based hydroponic garden center Aqua Serene. Following the announcement, the company finalized the $4 million purchase of a California-based hydroponic garden center, Mendocino Greenhouse and Garden Supply. Shares of GrowGeneration Corp. (NASDAQ: GRWG) climbed 5% in the previous month.
The company has a market cap of $2.4 billion. In the first quarter of 2021, GrowGeneration Corp. (NASDAQ: GRWG) had an EPS of $0.10, beating estimates by $0.03. The company’s first-quarter revenue came in at $90.02 million, beating estimates by $3.66 million. The stock has gained 435% in the last twelve months.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $127 million in GrowGeneration Corp. (NASDAQ: GRWG).
2. Tilray, Inc. (NASDAQ: TLRY)
Number of Hedge Fund Holders: 21
Tilray, Inc. (NASDAQ: TLRY) ranks 2nd on the 10 best CBD stocks to invest in. The Canadian pharmaceutical company develops and markets medical marijuana and cannabinoids. The company has established North America, Latin America, New Zealand, Europe, and Australia.
On July 27, Cantor Fitzgerald analyst Pablo Zuanic maintained an Overweight rating on Tilray, Inc. (NASDAQ: TLRY) and a price target of $19 per share. In May, Jefferies analyst Owen Bennett upgraded Tilray, Inc. (NASDAQ: TLRY) to a Buy rating and increased the firm’s price target to $23 per share. Following its merger with Ontario-based medical marijuana producer Aphria Inc., the marijuana firm is now among the most significant leaders in the Canadian industry, according to the analyst. It also has potential in the US market. Shares of Tilray, Inc. (NASDAQ: TLRY) increased 66% year to date.
The company has a market cap of $6.1 billion. In the first quarter of 2021, Tilray, Inc. (NASDAQ: TLRY) had an EPS of -$1.75, missing estimates by $1.67. The company’s revenue in 2020 increased by 26% year over year to $210.5 million, owing to a 153% increase in international medical marijuana sales.
At the end of the first quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $257 million in Tilray, Inc. (NASDAQ: TLRY), up from 17 in the previous quarter worth $47 million.
1. Jazz Pharmaceuticals plc (NASDAQ: JAZZ)
Number of Hedge Fund Holders: 37
Topping the list of the 10 best CBD stocks to buy now is Irish biopharmaceutical firm Jazz Pharmaceuticals plc (NASDAQ: JAZZ). In May, the company acquired Epidiolex manufacturer GW Pharmaceuticals (NASDAQ: GWPH), which produces cannabinoid medication for cancer and neuropathic pain for approximately $7.6 billion.
RBC Capital analyst Daniel Busby maintained an Outperform rating on Jazz Pharmaceuticals plc (NASDAQ: JAZZ) on July 23, increasing the price target to $216 per share from $190 previously, citing the FDA-approved Rylaze for acute lymphoblastic leukemia and lymphoblastic lymphoma treatment as a potential growth driver for the company.
The company has a market cap of $10.6 billion. In the first quarter of 2021, Jazz Pharmaceuticals plc (NASDAQ: JAZZ) had an EPS of $3.92, beating estimates by $0.21. The company’s first-quarter revenue was $607 million, up from $524 million in the same quarter last year. Shares of Jazz Pharmaceuticals plc (NASDAQ: JAZZ) increased 6% in the previous three months and gained 52% in the previous year.
At the end of the first quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $1.26 billion in Jazz Pharmaceuticals plc (NASDAQ: JAZZ), up from 17 in the preceding quarter worth $29,000.
You can also take a peek at the 15 Best Value Stocks to Invest In and 10 Most Valuable Companies in Europe.
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Disclosure: None. 10 Best CBD Stocks to Invest In is originally published on Insider Monkey.
