The second full week of August 2019 might go down in the history books as a turning point. This was when the benchmark Dow Jones index absorbed an 800-point drop, the worst day so far this year. Naturally, the volatility impacted already beleaguered marijuana stocks.
In my view, the cannabis market suffered from a two-pronged attack. First, it takes a brave soul to go against broader market bearishness. Obviously, there were few takers of the contrarian approach. Second, cannabis players delivered poor earnings results. That sent skeptical investors to run for the exits, turning marijuana stocks to buy into something else entirely.
As a weed bull, I’m of course very disappointed. However, I think this presents an opportunity to consider the bigger picture for marijuana stocks.
Primarily, U.S. public attitudes toward the maligned plant have shifted dramatically, with a majority supporting legalization. Just maybe, risk-takers can profit handsomely by putting red-inked cannabis companies on their list of stocks to buy now.
Furthermore, I’m very encouraged at the political situation as it pertains to marijuana stocks. Last year, the farm bill was one of the few pieces of legislation that earned consensus support. And if the Trump administration won’t push for legalization, Democratic presidential candidates will.
To the above point, because legalization is so popular, Trump might have to cede some ground here. If that’s the case, you don’t want to leave cannabis out of your stocks to buy list.
So, don’t give up on weed yet. Here are the ten best marijuana stocks to buy now:
Aurora Cannabis (ACB)
Aurora Cannabis (NYSE:ACB) is easily one of the top names among marijuana stocks. However, the recent price action for ACB stock belies its reputation. Things got even uglier for the company when it announced an expansion of its credit leverage, totaling approximately 360 million CAD.
Why such a dour response toward ACB stock? A familiar theme has popped up regarding the sea of disappointing earnings reports of late. Investors no longer want to hear about a good narrative or potential opportunities. Instead, they want evidence of traction.
Further, they’d like companies like Aurora Cannabis to shore up their operations and financials before taking on bigger risks. Thus, a combination of fear and a lack of credibility has hurt ACB stock.
Granted, we’re in an ugly state of affairs for marijuana stocks. That said, ACB stock does have a tremendous ace up its sleeve: dominance in international presence. As medical cannabis legalization takes hold in other parts of the world, Aurora is well-positioned to take advantage.
Thus, this fallout provides a case to put ACB on your list of stocks to buy now.
Canopy Growth (CGC)
As I mentioned above, investors have punished Canopy Growth (NYSE:CGC) and CGC stock due to a recurring theme: fundamentally, marijuana stocks have not been able to convincingly deliver the goods. More critically, the markets shined a spotlight on Canopy Growth for its fiscal first-quarter earnings report. The results weren’t great.
Canopy couldn’t live up to consensus earnings expectations. Given broader weakness among marijuana stocks in this area, that’s no surprise. However, what really concerned investors and industry observers was that Canopy may have lost their lead in the Canadian recreational cannabis market. That was one of the few fundamental strongholds that management claimed in prior reports. With that apparently gone, Wall Street dropped CGC stock like a bad habit.
I don’t think anyone – even the weed bulls – will claim that CGC stock is a compelling investment at this juncture. However, for risk-tolerant speculators, I believe Canopy still presents a viable opportunity. For instance, the company has been aggressively pushing into the U.S. market, investing in diverse products such as edible cannabis.
Admittedly, Canopy will require substantial patience. However, the believability of its narrative means it belongs on a speculative list of stocks to buy now.
Cronos Group (CRON)
Among major marijuana stocks, many investors consider Cronos Group (NASDAQ:CRON) as the most credible investment. Certainly, the biggest factor in this positive reputation comes from tobacco giant Altria (NYSE:MO). Known worldwide for its Marlboro brand, Altria plunked $1.8 billion for a 45% stake in CRON stock.
As our own Will Ashworth stated, CRON stock is still a “brilliant” buy for Altria. However, individual weed investors have a different sentiment. Like other marijuana stocks, Cronos has charted an ugly trend channel over the trailing half-year period.
Again, a significant factor in the bearishness is credibility and fundamental justification. Currently, CRON stock sports a market capitalization of $4 billion. However, with recent quarterly revenue topping out at less than $8 million, investors don’t see the rationale for the premium.
It’s a fair point. But it’s worth noting that CRON stock has always been a play toward the ultimate U.S. marijuana market. And management is making huge strides toward this lucrative arena. A great example is their $300 million buyout of Lord Jones, a U.S.-based hemp and cannabidiol (CBD) beauty products manufacturer.
Essentially, if legalization momentum continues in the American cannabis space – and that really looks to be the case – then Cronos should skyrocket. That’s a good enough reason to consider placing CRON on your portfolio of stocks to buy now.
Analysts never expected medical cannabis specialist Tilray (NASDAQ:TLRY) to deliver a profit for its most recent earnings report. However, they didn’t expect the kind of steep losses that management delivered. As a result, TLRY stock took a massive beating that shocked even weed advocates that are used to extreme swings.
Even worse for TLRY stock, investors completely ignored some of the underlying company’s positive news. For instance, Tilray’s revenue came in much higher than consensus estimates. Unfortunately, the negative sentiment surrounding marijuana stocks was simply too much for the cannabis firm.
The other reason why the markets adopted a dim view on TLRY stock is Tilray’s home market. With disappointment being the key theme for marijuana stocks, it’s becoming clear that the Canadian weed sector is reaching a saturation point.
However, for interested speculators, I wouldn’t extinguish TLRY from your stocks to buy radar. Ultimately, we all know that Canada is a limited market. The main goal here is the U.S., and Tilray has positioned itself for the very real possibility of legalization.
For example, Tilray bought Manitoba Harvest for $317 million. Billed as the world’s largest hemp-based foods manufacturer, Manitoba represents a viable platform for Tilray to expand into the CBD food and beverages market.
According to many observers, Hexo (NYSE:HEXO) delivered disappointing revenue for its fiscal Q3. I’d argue that the sales haul wasn’t disappointing at all. However, Hexo released their earnings results at a time when investors were seeking substance from marijuana stocks. Unfortunately, they couldn’t come through against these elevated expectations, and HEXO stock fell as a result.
Technically, HEXO stock has another problem. Hexo is one of the smaller outfits among marijuana stocks. Currently, its market cap is just a little over $1 billion and generates quarterly sales of around $10 million. Yet the company is making heavy investments which worry onlookers.
Obviously, HEXO stock isn’t for the faint of heart. This is really a gamble that its expansionary efforts will pan out quicker than its cash burn will destroy it. Given the political momentum behind marijuana stocks, I like my chances. Hexo has many cogs in play, including a partnership with Molson Coors (NYSE:TAP) to develop CBD beverages.
Green Organic Dutchman (TGODF)
Hands down, Green Organic Dutchman (OTCMKTS:TGODF) has the coolest name among marijuana stocks to buy now. Unfortunately, that hasn’t helped its case in the markets. Like other players in this sector, TGODF stock has taken a dive since early spring of this year. That said, it has weathered the recent storm better than most.
Is that a clear sign to jump onboard TGODF stock? As a speculator, I believe Green Organic Dutchman offers serious potential. However, those with a more conservative outlook should be careful. With a price tag of less than $3, TGODF is under the law of small numbers. Any downturn in this segment could exponentially hurt shares.
Fundamentally, prospective buyers should note that Green Organic Dutchman is not yet profitable. Still, I do like the fact that for its Q2 report, it sequentially grew revenue 20% from Q1. Much of that growth spurt came from European demand for Green Organic’s premium-label cannabis products.
Additionally, the company just hatched their “Grower’s Circle” project aimed at capturing market share for Canadian medical marijuana. Of course, TGODF stock is highly speculative, but there’s also justification for this risk.
Charlotte’s Web (CWBHF)
Charlotte’s Web (OTCMKTS:CWBHF) is one of those rare names among marijuana stocks to buy now that has a broader positive trajectory in the markets. Year-to-date, CWBHF stock is up 96%. Shares have also recovered much of the losses incurred during the spring season.
Despite this encouraging positive, Charlotte’s Web couldn’t avoid a recurring headwind in this segment: disappointing earnings results. For its Q2 report, the company missed on both profitability and revenue consensus estimates. Immediately, CWBHF stock took a dive.
Still, let’s look at some positives for the CBD specialist. Headquartered in Colorado, CWBHF stock levers a geographic advantage. Other, mostly Canadian weed firms are aggressively working their way in. Charlotte’s Web is already here.
More importantly, this isn’t just a statistic. Charlotte’s Web has made good on this advantage, securing retail deals with CVS Health (NYSE:CVS) and Kroger (NYSE:KR). In my opinion, this is one of the most impressive set of deals in the CBD space. Therefore, CWBHF stock deserves serious consideration for your portfolio of marijuana stocks to buy now.
CV Sciences (CVSI)
Although a long shot among speculative marijuana stocks, CV Sciences (OTCMKTS:CVSI) brings a compelling narrative to the table. As a pharmaceutical company, CV Sciences could disrupt its industry by forwarding therapies based on natural formulations, not artificial concoctions.
Unfortunately, the markets have not found this narrative convincing enough. Along with broader credibility questions impacting the cannabis market, CVSI stock has incurred a worrying amount of red ink. Logically, this is only a name that gamblers should consider.
Further, CVSI stock has a current price tag just over $3. Any bearishness could plummet shares. At the same time, positive catalysts could spark a massive upswing.
It’s this latter point that attracts speculators. Plus, the political situation somewhat favors CVSI stock. Over the years, the opioid crisis has gutted several cities across America. And what was the cause of this crisis? Pharmaceutical products levering unintended consequences.
With a focus on natural CBD-based therapies, I think the general public will give a fair shot to the concept. After all, most Americans already support marijuana legalization.
Weed player Aphria (NYSE:APHA) used to be one of the high-flying marijuana stocks to buy now. However, a short-seller’s report accusing the company of being a shell game plummeted APHA stock. It also sent ripples throughout the industry. This wasn’t the first time that critics have questioned the legitimacy of cannabis businesses, and it won’t be the last.
What was especially damaging was that some of the accusations stuck. In the aftermath, high-level executives, including the CEO, resigned from their posts. Moreover, Aphria promised a line-by-line rebuttal of the charges, but they never came to fruition. Even now, management is coy about the matter. Essentially, Aphria is doing everything it can not to address this incident, which hasn’t helped APHA stock.
Of course, this is one of the riskiest names among marijuana stocks. Still, I can’t get something out of my mind: current CEO Irwin Simon, who came over from Hain Celestial (NASDAQ:HAIN), is taking a serious reputational risk with Aphria. That he’s willing to initiate the recovery process leads me to have some confidence in APHA stock.
Aleafia Health (ALEAF)
At the end of our list of marijuana stocks to buy now, I’m going to present my most speculative idea. A healthcare enterprise focusing on cannabis-based therapies, Aleafia Health (OTCMKTS:ALEAF) levers a vast network of clinics and patients. And these stats have jumped to 40 clinics and approximately 60,000 patients with its all-stock acquisition of Emblem. Thus, ALEAF stock offers a valid fundamental case.
However, that hasn’t panned out so well in the markets this year. ALEAF stock is down over 20% YTD. Additionally, this is a true penny stock, with shares trading hands under a buck. Naturally, with such a cheap asking price, you can expect tremendous volatility. For now, that volatility has shoved ALEAF deep down in the gutter, Pennywise style.
However, I still see some positives. For one thing, volume is relatively robust for such an offering. Second, it appears that ALEAF stock has found support around the 80-cent level. Of course, this is no guarantee considering the share price. But the combination of a sound business and a supportive political environment makes ALEAF a compelling gamble.
As of this writing, Josh Enomoto is long HEXO and ALEAF.