In this article, we will discuss the 7 Most Undervalued Pot Stocks To Buy According To Analysts.
The global cannabis market was worth $26.86 billion in 2022, Spherical Insights & Consulting data shows. Three years later, Mordor Intelligence valued the market at $44.60 billion. The research firm expects the market to nearly triple in the next five years, projecting it to grow to $102.10 billion by 2030.
As that happens, cannabis stocks have experienced significant volatility, with many major companies down 65% or more over the past three years. This volatility, according to NewLake Capital Partners CEO Anthony Coniglio, is likely to define the cannabis sector in 2025. “Trading volumes will continue to be driven by the news cycle, with investors quick to take profits on any upward price movement, fueling repeated cycles of rallies and pullbacks,” he said.
Other analysts maintain optimistic outlooks for select cannabis companies. Sonny Randhawa of Seaport Global Securities initiated coverage on several cannabis stocks as he believes a substitute scenario could unfold. He assigned Buy ratings to three major stocks, noting that “With budgets constrained, we believe new customer penetration rates could accelerate as consumers spend more time at home and the bang-per-buck for cannabis vs alcohol keeps moving higher.”
Jordan Tritt, CEO of BDSA, a cannabis market intelligence firm, believes that primary growth in the cannabis sector over the next five years will come from new adult-use markets coming online. As such, he advises investors to put their money in “established companies that have the resources to capture this growth.”
Another possible catalyst for cannabis market growth is the regulatory landscape. For instance, industry observers suggest rescheduling cannabis from Schedule I to Schedule III could neutralize IRS Rule 280E, which currently prohibits the deduction of operating expenses, potentially adding tens of millions to cannabis company cash flows.
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Our Methodology
To create a list of the 7 most undervalued pot stocks to buy, according to analysts, we reviewed various cannabis ETFs to identify companies involved in the cannabis industry. We then scanned for stocks that analysts believe are undervalued, with a forward price-to-earnings multiple of less than 20, and well-positioned to generate significant long-term value. Finally, we ranked the stocks in ascending order based on the stock’s upside potential as of July 9, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Most Undervalued Pot Stocks To Buy According To Analysts
7. Chicago Atlantic BDC, Inc. (NASDAQ:LIEN)
Stock Upside Potential as of July 9: 2.42%
Forward Price to Earnings Ratio (P/E) as of July 9: 7.41
Number of Hedge Fund Holders as of Q1 2025: N/A
Chicago Atlantic BDC, Inc. (NASDAQ:LIEN) is one of the 7 most undervalued pot stocks to buy according to analysts. On July 1, the company announced changes to its executive team, appointing an interim Chief Financial Officer (CFO) and a new Chief Accounting Officer (CAO). The move was necessitated by Martin Rodgers’ resignation from the CFO position.
Rodgers exited the CFO position on July 1, after which the company stated that “Mr. Rodgers’ decision to resign from his position as Chief Financial Officer of the Company was not due to a disagreement on any matter related to the Company’s operations, policies or practices.” In his stead, Thomas Geoffroy will serve as the interim CFO. The appointment took effect immediately.
Mr. Geoffroy has over 20 years of experience in accounting and finance. He has expertise in financial reporting, operations, and internal controls within the financial services industry. His background includes serving as CFO of a NASDAQ-listed mortgage REIT, a publicly traded credit-focused asset management firm, and a family office. He also held roles as Finance and Operations Principal (CFO), General Securities Principal, and Chief Compliance Officer at United Capital Markets, as well as Controller at Ares Management.
Chicago Atlantic BDC’s Board also appointed Gianni Fazio as the new CAO. Mr. Fazio is a licensed Certified Public Accountant with over five years of experience in finance and accounting. He joined the company in 2023 after previously serving as a Venture Associate at Adit Ventures.
Chicago Atlantic BDC, Inc. (NASDAQ:LIEN) invests across the cannabis ecosystem. It provides direct loans and equity financing to privately held cannabis companies and related businesses. Its investment objective enables companies in niche and underserved sectors to gain access to much-needed capital.
6. Quest Diagnostics Incorporated (NYSE:DGX)
Stock Upside Potential: 8.79%
Forward Price to Earnings Ratio (P/E): 17.89
Number of Hedge Fund Holders as of Q1 2025: 46
Quest Diagnostics Incorporated (NYSE:DGX) is one of the 7 most undervalued pot stocks to buy according to analysts. On June 10, the company said it is developing a Multi-Cancer Stratification (MCaST) blood test in collaboration with The University of Texas MD Anderson Cancer Center. This initiative aims to improve the assessment of elevated cancer risk in individuals.
The announcement detailed that the MCaST blood test will identify individuals at an elevated risk for various cancers. Afterwards, the individuals will be encouraged to pursue appropriate preventive screenings or other medical evaluations that could lead to earlier detection. The test is designed to identify the risk of developing several cancers, including “colorectal, lung, breast, pancreatic, ovarian, liver, prostate, esophageal, and stomach cancers.”
Quest Diagnostics stated that MCaST, on which the blood test is based, is a “cohesive risk model” developed by Dr. Samir Hanash’s laboratory at MD Anderson Cancer Center. This technology utilizes circulating protein biomarkers, which were identified through “extensive clinical research conducted on screening study cohorts involving tens of thousands of individuals.” The company plans to further refine, develop, and validate this technology for its own laboratory-developed test.
Quest Diagnostics Incorporated (NYSE:DGX) is a major provider of diagnostic testing services. It plays a significant role in the cannabis industry by providing drug testing services. It offers various drug testing methods, including urine, oral fluid (saliva), and hair testing, to detect marijuana use in both workplace and clinical settings.
5. AbbVie Inc. (NYSE:ABBV)
Stock Upside Potential: 13.52%
Forward Price to Earnings Ratio (P/E): 15.43
Number of Hedge Fund Holders as of Q1 2025: 86
AbbVie Inc. (NYSE:ABBV) is one of the 7 most undervalued pot stocks to buy according to analysts. On July 3, the company provided an update to its 2025 earnings guidance to account for a pre-tax acquired in-process research and development (IPR&D) and milestones expense of $823 million in the second quarter of 2025. This expense is expected to reduce both GAAP diluted earnings per share (EPS) and adjusted non-GAAP diluted EPS by $0.42 for the second quarter. Also, the company updated its full-year 2025 adjusted diluted EPS guidance to a range of $11.67 to $11.87, incorporating the $823 million IPR&D expense.
According to the update, the $823 million expense is related to acquired IPR&D, typically incurred through collaborations, licensing agreements, and asset acquisitions. AbbVie stated that such costs are not routinely forecasted due to the uncertainty surrounding their timing and occurrence. This IPR&D expense is part of AbbVie’s broader strategy to bolster its pipeline through acquisitions and collaborations.
AbbVie Inc. (NYSE:ABBV) is a diversified healthcare company with a modest cannabis connection through its legacy drug, Marinol, a synthetic THC treatment for nausea and appetite loss. It also holds patents related to cannabis, including uses for cancer treatment, juvenile arthritis, and skin disorders.
4. NewLake Capital Partners, Inc. (OTCMKTS:NLCP)
Stock Upside Potential: 14.31%
Forward Price to Earnings Ratio (P/E): 12.79
Number of Hedge Fund Holders as of Q1 2025: N/A
NewLake Capital Partners, Inc. (OTCMKTS:NLCP) is one of the 7 most undervalued pot stocks to buy according to analysts. On June 16, the company announced a cash dividend of $0.43 per share of common stock for Q2 2025. The payment equates to an annualized dividend of $1.72 per common share.
The company has consistently paid dividends, with regular increases over several years. The $0.43 per share dividend in the current announcement marks the fifth consecutive quarter the company has paid this amount. In Q2 2023, NewLake’s investors received a $0.39 per share payout.
NewLake Capital Partners, Inc. (OTCMKTS:NLCP)’s edge stems from operating as a real estate investment trust (REIT). It provides real estate capital to state-licensed cannabis operators through sale-leaseback transactions, third-party purchases, and funding for build-to-suit projects.
3. Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY)
Stock Upside Potential: 58.72%
Forward Price to Earnings Ratio (P/E): 8.70
Number of Hedge Fund Holders as of Q1 2025: 27
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) is one of the 7 most undervalued pot stocks to buy according to analysts. On June 23, Mizuho reiterated its “Outperform” rating on Harmony and maintained a price target of $48. The reaffirmation followed Harmony’s presentation of preclinical data for BP1.15205 at the SLEEP 2025 conference.
BP1.15205, an investigational orexin-2 receptor (OX2R) agonist. The data highlighted “significant wake-promoting and cataplexy-suppressing effects” of BP1.15205 in a standard transgenic mouse model of narcolepsy type 1. Specifically, preclinical characterization described BP1.15205 as having “favorable efficacy and safety/tolerability profiles.” Mizuho noted that while this drug candidate is earlier in development compared to some competitors, it “appears to be the most potent orexin candidate based on EC50 measurements.”
Mizuho’s analysis included a comparison between Harmony’s BP1.15205 and TAK-861/oveporexton, which is currently the most advanced orexin in development, with Phase 3 data expected in the summer. The firm concluded that Harmony’s candidate “compares favorably against this competitor.” The research firm expressed optimism that Harmony’s orexin candidate could potentially become a “best-in-class asset” in its category, despite being at an earlier stage of development. Mizuho’s near-term focus remains on the upcoming Phase 3 readout for ZYN-002 in Fragile X Syndrome, which is anticipated in the third quarter of 2025.
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) is a commercial-stage biotech firm making a mark in the cannabis sector through the development of a pharmaceutically manufactured, synthetic CBD gel called ZYN-002. The gel is used for rare neuropsychiatric conditions, such as Fragile X syndrome and 22q11.2 deletion syndrome. It’s also developing a cannabinoid-based drug that is synthesized and formulated as a gel for transdermal delivery.
2. Jazz Pharmaceuticals PLC (NASDAQ:JAZZ)
Stock Upside Potential: 69.33%
Forward Price to Earnings Ratio (P/E): 12.24
Number of Hedge Fund Holders as of Q1 2025: 52
Jazz Pharmaceuticals PLC (NASDAQ:JAZZ) is one of the 7 most undervalued pot stocks to buy according to analysts. On June 11, the company presented at the Goldman Sachs 46th Annual Global Healthcare Conference, where it outlined its strategic growth initiatives and acknowledged various challenges.
According to the presentation, Jazz Pharmaceuticals reported robust growth in its neuroscience segment, particularly with Xywav (for sleep disorders like narcolepsy and idiopathic hypersomnia) and Epidiolex (for epilepsy). These products showed “strong growth” in the first quarter of 2025. Xywav’s low sodium content and flexible dosing were highlighted as key market advantages.
The company detailed that it is expanding its oncology portfolio and pipeline, which now accounts for over half of its 2024 revenue, up from 26% in 2018. Key oncology initiatives include Zanidatamab (Ziihera), Zepzelca (lurbinectedin), Subzelca (formerly JZP-351), and Dordavapril (from Chimerix acquisition).
The company stated that beyond marketed products, it is advancing its pipeline with upcoming product launches and regulatory decisions anticipated to drive future growth. This includes the orexin program (JZP-441 trials being monitored for cardiovascular effects) and prasinezumab in Europe.
Jazz Pharmaceuticals PLC (NASDAQ:JAZZ) expanded its footprint into the cannabis sector with the acquisition of GW Pharmaceuticals. Consequently, it develops and markets FDA-approved drugs that contain purified cannabis-based substances, specifically cannabidiol (CBD), to treat serious illnesses.
1. Advanced Flower Capital Inc. (NASDAQ:AFCG)
Stock Upside Potential: 123.71%
Forward Price to Earnings Ratio (P/E): 5.66
Number of Hedge Fund Holders as of Q1 2025: 6
Advanced Flower Capital Inc. (NASDAQ:AFCG) is one of the 7 most undervalued pot stocks to buy according to analysts. On June 13, the company declared a quarterly dividend of $0.15 per outstanding share of common stock for the quarter ending June 30, 2025 (Q2 FY2025). Common stockholders on record as of the close of business on June 30, 2025, will receive the funds on July 15, 2025.
This dividend payment is markedly lower than in previous quarters—34.78% lower than Q2 2024, Q3 2024, Q4 2024, and Q1 2025 (all $0.23 per share), and a 68.75% decrease from Q4 2023 ($0.48 per share). The annualized dividend has decreased from $1.92 in Q4 2023 to $0.92 in Q2–Q4 2024 and Q1 2025 and further to $0.60 in Q2 2025. The company attributed the reduction in Q2 2025 to a realized loss during the quarter related to the loan to Public Company A.
Advanced Flower Capital Inc. (NASDAQ:AFCG) operates as a commercial mortgage real estate investment trust (REIT). It provides institutional loans to state-law-compliant cannabis operators. Structured as a mortgage REIT, the company targets underserved borrowers in cultivation, processing, and distribution, offering tailored financing solutions backed by commercial real estate.
While we acknowledge the potential of Advanced Flower Capital Inc. (NASDAQ:AFCG) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AFCG and that has 100x upside potential, check out our report about this cheapest AI stock.
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