Company / Analytics

Analytics, 04 August 2022

Cannabis stocks to consider for your portfolio

The general cannabis and cannabis products perception has drastically changed over time. Governments across the globe have continuously made laws that are more tolerant of the commodity and this has consequently presented an opportunity for investors. In the US for example, 37 states now permit the use of Marijuana in some form.

In 2021, the global legal cannabis market size was estimated to have a value of $17.8B. This figure is expected to expand to about USD 197.74 billion by 2028 at a compound annual growth rate of 25%. Fortunes are being made in this market that investors want to be a part of, and a few billionaires have also been minted thanks to cannabis.

Companies engaged in the Marijuana industry are either engaged in the research, development, distribution, and sale of medical and recreational marijuana. In the equity markets, some of the biggest cannabis industry players include Canopy Growth Corp, the Cronos Group, and Tilray Inc. being a young industry, an opportunity also arises in young and growth stocks with a potentially huge upside. In this article, we analyze some well-established cannabis stocks and potentially profitable best value stocks. In the case of well-established stocks, the general consensus is a market capitalization of $2B USD.

Well-established cannabis stocks

Trulieve Cannabis Corp.

Trulieve (TRUL.CX) is a US company with a current market capitalization of $3B dollars. The company generally engages in the cultivation, manufacturing, retail, and logistics of Marijuana products. The company is a vertically integrated, multi-state company and also trades in OTC markets under the symbol TCNNF.

The company also boasts a good P/S ratio of 2.0. The P/S ratio shows how much you’re paying for the stock for each dollar of sales generated. This ratio can be used to gauge the profitability of companies in the early stages of development or industries suffering from major shocks.

Innovative Industrial Properties Inc.

With a market cap of about $3.2B USD, Innovative Industrial Properties (IIPR) also boasts as the marijuana stock that has had the smallest decline in total return over the past 12 months in this list. The company is a real estate investment trust (REIT) that engages in the acquisition, disposition, development, and management of industrial facilities leased to tenants in the regulated medical cannabis industry.

The company bot of a very rich portfolio that includes specialized industrial and greenhouse buildings leased to state-licensed, medical-use cannabis cultivators across the U.S. On June 15, it declared a Q2 2022 dividend of $1.75 per share of common stock, as well as a dividend of $0.5625 per share of 9.00% Series A Cumulative Redeemable Preferred Stock.

Verano Holdings Corp.

Verano Holdings is a US company that recorded a high year-over-year (YOY) sales growth for the most recent quarter, boasting a 67.4% revenue growth. The market cap of the company stands at $1.95B.

The company is a vertically integrated, multi-state cannabis operator. They produce a wide range of medical and adult-use cannabis products. It owns and operates 12 cultivation and manufacturing facilities and owns 95 dispensaries in a number of states throughout the U.S. The company’s stock also trades OTC in the U.S. under the ticker VRNOF.

Best value cannabis stocks

Ayr Wellness Inc.

In the cannabis industry, Arya Wellness posted a fairly low price-to-sales ratio of 0.8, indicating to its investors a high business value. The company is involved in the cultivation, manufacturing, and dispensing of cannabis and cannabis-derived products.

With a market capitalization of $300M, the company also boasts a large portfolio of products including flowers, tinctures, edibles, and vape products under brands including Kynd, Origyn, Stix Preroll, Levia, and Road Tripper.

The company reported Q1 2022 results on May 26. Net loss attributable to Ayr narrowed year-over-year (YOY) as revenue nearly doubled. The company said that profits were affected by heavy investments in projects that hurt short-term operating margins. Ayr Wellness also trades OTC in the U.S. under the ticker AYRWF.

Jushi Holdings Inc.

Like Ayr Wellness, Jushi holdings has a market capitalization of about $300M. The company also posted a low price-to-sale ratio of 1.4 over the last 12 months.

The company is a holding company focused on branded cannabis and hemp-based assets. It is engaged in retail, distribution, cultivation, and processing operations. Its brands include: The Bank, focused on plant genetics and cultivation; The Lab, specializing in vape products and concentrates; Nira+, a producer of medicinal THC products; Sèche, which offers various branded ground and flower cannabis products; and Tasteology, a provider of THC-infused products.

Jushi also trades OTC in the U.S. under the ticker JUSHF. Jushi announced on June 29 that The Lab debuted its first line of concentrates made using hydrocarbon extraction. The cannabis extract market was an estimated $9.2 billion in 2021.

OrganiGram Holdings Inc

Organigram Holdings posted the best year-over-year revenue growth among companies dealing with cannabis, boasting a staggering 118% revenue growth for the quarter ending June. The company currently has a market capitalization of about $300M.

The company is based in Canada and engages in the production of medical and recreational cannabis products. Its subsidiaries include Organigram Inc., Laurentian Organic Inc., and The Edibles and Infusions Corp., and its brands include Edison Cannabis Co., SHRED, and Monjour, among others.

Investor note

In equity markets, the Marijuana industry is relatively young, with the highest cap stock on our list being less than $4 billion. Like any other stock investment, it is advisable to approach cannabis stocks with caution and to invest within a personally accepted risk tolerance level.

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