Morning Briefing -May 17, 2018
Top 9 Stocks To Follow
Do you think you know something about marijuana stocks? By now, you’ve heard the bigger names, Canopy, Aphria, Aurora, and on. Multi-billion-dollar valuations, with a great deal of unknowns about what sustainable levels of pricing, distribution, revenues and profits. This morning’s briefing includes not five, but nine of the top picks, and you may be surprised by which companies are on the list.
You may be asking at this point, “Wait, if one source has five stocks and another source has five stocks, isn’t that ten stocks in total? Read on…
So far, 2018 has been generally trending downwards, with occasional up days for the markets in general and weed stocks in particular, as discussions of overvaluation of these companies is considered. Potnetwork reports that the following stocks were the best performers in 2018:
Cronos Group Inc. (NASDAQ:CRON) (TSX-V:CRON), listed on the Nasdaq exchange. They are geographically diversified and vertically integrated and operate within Health Canada’s Access to Cannabis for Medical Purposes Regulations. They have partnered with US-based MedMen, one of the largest retailers of legal cannabis in the U.S. to bring the brand into Canada via retail distribution.
Aphria Inc. (TSX:APH) (USOTC:APHQF) is down roughly 40% from its early January highs, but recently announced that they acquired Nuuvera Inc. and would be renamed Aphria International Inc. The new entity seems focused on international markets in Europe , Australia and Africa.
CannaRoyalty Corp. (CSE:CRZ) (OTCQX:CNNRF) has vast holdings across the United States and Canada. Its focus is clearly on the California market this year. With legalization and distribution just in its infancy in one of the richest, most liberal and most populous states, the market is said to be larger than the entire Canadian market in a more concentrated area, it makes good sense to follow this company and watch their smoke. Recent acquisitions show they also have deal-making capability.
Scotts Miracle-Gro Co. (NYSE:SMG) Surprised to see a fertilizer company listed here? I was. A well-established domestic brand in gardening that has a 75 percent stake in hydroponics equipment company Gavita International. Hydroponics continues to be a popular method of growing cannabis, and according to Potnetwork is a $24 billion market currently. With claimed revenues over $250 million per year from hydroponics, they are already a significant player in this area. Uncommonly in this space, the company pays a dividend with a yield of just over 2%, so it represents a stable bulwark in your cannabis portfolio against market downturns.
Isodiol International Inc. (CSE:ISOL) (ISOLF) is a CBD oil producer that recently announced this year the assets in the UK, Brazil and China, that are involved in production of certified organic CBD oils, cannabinoids and terpenes.
Baystreet.ca offers a slightly different perspective for their top stocks to watch, but there are some interesting similarities.
Canopy Growth Corp. (TSX:WEED) Needless to say, this stock has been on everyone’s radar screen and you can’t come into this market and not at least give this company some consideration – a $4+ billion market cap stock will do that. They also have liquid capital to back up that market cap, completing some recent financing from BMO. It is now listed on the TSX Composite Index
Cannabis Wheaton (TSX-V:CBW; OTC: CBWTF) offers wide exposure through diversified holdings in North America. A royalty company collecting pot revenues from a number of companies and diversified vertically and horizontally across producers and other components of the supply and distribution chain. The company has already lined up 15 partners, with 17 facilities and that’s a lot of hay, in anyone’s estimate. It also has 39 clinic relationships with access to over 30,000 registered medical marijuana patients.
Sanofi (NYSE:SNY) The question for many, was when, not if, big pharma was going to enter this space. Some companies have been producing prescription THC for some time. The French company Sanofi is one of them, marketing Rimonabant – a drug designed to control appetite. No doubt they are already scanning the horizon for pre-revenue or late stage research-based medical marijuana companies. They are not alone, as 2018 has been predicted to be the year that Big Pharma moves in to the medical space, as more governments, state, federal and international progress toward wider access.
Pfizer (NYSE:PFE) Another Big Pharma player with solid earnings, dividends and growth. Like many in this space, maturing patent cycles on some of their major workhorse drugs are putting downward pressure on the stock, as the search continues for new products and more effective treatments. Cannabis represents a largely unexplored and unknown branch of plant-based medicine, and if well-capitalized players like Pfizer come in and start acquiring, revenue and profit, already at the impressive levels of $52.8 billion and $7.2 billion last year, could accelerate.
Scotts Miracle-Gro (NYSE:SMG) Well looky here! This fertilizer company has made the list again. Since we already talked about this, no point in covering old ground. Time to call your broker?