Marijuana stocks are hot these days. And there’s a good reason why. As Canada and several U.S. states have legalized cannabis for both recreational and medical use, the sector has plenty of potential. In fact, some analysts think that by 2025, the cannabis sector could grow to be a $146 billion industry. That means it will grow at a compound annual growth rate (CAGR) of 34% from today. Naturally, many start-ups and early stage marijuana stocks have jumped into the fray to take advantage of that growth.
But the truth is, many of the winners in the cannabis sector are already here and cooking. Thanks to their really early mover status, growing moats and big deals, several marijuana stocks are already emerging as winners in the surging industry. The reality is, investors may not need to dabble in penny stocks and up-listed pot stocks. The only three marijuana stocks you need to own are already here.
With that said, here are the three real winners in the cannabis sector.
Marijuana Stocks to Buy: GW Pharmaceuticals PLC- ADR (GWPH)
One of the biggest uses of cannabis continues to be for medicinal purposes. There are plenty of marijuana stocks out there looking at using the power of cannabis to cure and treat various ailments. But only GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) has an approval under its belt.
Last summer, GWPH received approval for its cannabinoid drug Epidiolex, which is used to treat seizures associated with Lennox-Gastaut syndrome or Dravet syndrome. An approval is an impressive feat for any biotech firm, let alone for marijuana stocks. The drug was officially launched in November and it was off to the races for GWPH stock. Year-to-date, shares are now up around 86%.
And it looks like the gains could keep coming for GW Pharmaceuticals.
Prescriptions of Epidiolex have surged in its first quarter of issuance and physicians seem to love the medication. GWPH stock generated more than $33.5 million in sales of the drug during the first quarter. Meanwhile, the biotech has been able to pivot the drug successfully in other trials. A phase III trial for Epidiolex in treating seizures associated with tuberous sclerosis complex has proved to be amazing so far. All in all, GW Pharmaceuticals may have a true blockbuster on its hands. The end market for treating epilepsy is just that massive and the firm should be able to pivot its medicine accordingly.
For investors looking at marijuana stocks in the medical sector, GWPH is a sure thing.
Canopy Growth Corporation (CGC)
Given that it’s a budding industry, those marijuana stocks with big partnerships are more likely to succeed these days. And no one has been racking up deals faster and better than leading cannabis firm Canopy Growth Corporation (NYSE:CGC).
First of all, CGC is a massive grower of pot. This scale provides it plenty of potential to serve other, larger, more established corporations. And that’s just what Canopy has done. The firm’s $4 billion deal with beverage and spirit maker Constellation Brands (NYSE:STZ ) set the industry standard. The duo has already started working on cannabis-infused drinks as well as edibles and other consumable products.
The deal also provided CGC plenty of cash to grow and make acquisitions of its own. CGC has smartly moved into the pet care arena via a deal with Martha Stewart. Meanwhile, a buyout of U.S.-focused Acreage Holdings will give it instant access to pot here at home when it legalized for recreational use.
With these major partnerships in tow, CGC has already cemented itself as the top player among the marijuana stocks. It has the scale, partnerships and cash available to actually make the cannabis dream a reality. For investors, it may be the only pot stock you need.
If Canopy is a play on recreational marijuana use, than leading cannabis stock Tilray (NASDAQ:TLRY) could be a play on the growing medical use around the world. Medical marijuana and cannabis treatment demand has already begun to surge in many locations. That’s because doctors look for alternatives to addictive opioids for pain relief. TLRY is on the leading edge of that trend, as one of the largest medical dispensaries around.
And it’s only getting bigger.
TLRY has partnered with major pharmaceutical giant Novartis (NYSE:NVS ). Through its Sandoz division, TRLY is able to tap into one of the largest pharmaceutical distribution networks in the world as well as provide guidance on how to navigate these various regulatory environments. Having a Novartis stamp on your medical products certainly can go a long way with doctors and consumers using medical marijuana. As a result, Tilray has been able to export its weed to far off places like the U.K., Australia, New Zealand and parts of South America.
All of this has shown up in the firm’s torrid revenue growth. Last quarter, sales at Tilray surged a blistering 195%. With its focus on being the global leader and having a major pharma stock in its corner, further sales and profits could be had.
In the end, TLRY could be the best of the marijuana stocks when it comes to being a major medical player.
At the time of writing, Aaron Levitt did not have a position in any of the stocks mentioned.