[Editor’s note: “10 Hot Pot Stocks to Buy” was previously published in October 2019. It has since been updated to include the most relevant information available.]
With the Agriculture Improvement Act of 2018, or the “farm bill” as it’s better known, de-scheduling industrial hemp and hemp-based derivatives, cannabis retail has flourished. Unfortunately, we can’t quite say the same about pot stocks to buy.
Call it a case of misplaced expectations. While the federal government green-lighting industrial hemp opened the doorway to products such as cannabidiol (CBD), business is still business. Essentially, investors weren’t willing to cut much slack for pot stocks simply because of a groundbreaking law.
As publicly traded cannabis firms produced disappointing earnings results, stakeholders increasingly lost their patience. With none of the major players stepping up, investors headed for the exits. Botanical specialists were no longer stocks to buy but stocks to dump while the going was good.
However, the disappointment wasn’t just limited to financial underperformance. A tragic and unfortunately-timed vaping crisis added to the woes. Several companies had invested deeply into cannabis-based vaping products, which are now under suspicion.
Is the ride over in pot stocks? For the conservative investor, going green isn’t the most appropriate strategy. Then again, this market subsegment has never advertised itself as a paragon of stability.
For the risk-takers and contrarians, though, I believe pot stocks to buy are compelling, especially at these levels. With sentiment at rock bottom, this sector probably has nowhere to go but up. Further, the hysteria around cannabis products is misplaced, which I will demonstrate throughout this list.
Therefore, if you’ve got the nerve, here are 10 pot stocks to buy that are on discount:
During the height of the marijuana craze, Tilray (NASDAQ:TLRY) was easily one of the most celebrated pot stocks to buy. At one point, TLRY stock touched $300 on an intra-day basis. Now, with shares just above $18 a pop, Tilray has absorbed one of the most devastating losses in recent memory.
But if you’re new to this market, I’d take another look at TLRY stock. For one thing, shares are very close to their initial public offering price of $17. In addition, hedge funds are starting to turn bullish on the embattled organization.
They have reason to be. Mostly, Tilray specializes in medical marijuana solutions. As a result, they have more legal leeway to distribute their products. Keep in mind that Tilray was the first company to import medical marijuana into the U.S. Moreover, growing global support for medicinal cannabis bodes well longer-term for TLRY stock.
Canopy Growth (CGC)
At the peak of its dominant market presence, analysts sang praises of Canopy Growth (NYSE:CGC). Here was an aggressively expanding company that provided the blueprint for success for other “weedpreneurs” to follow. Specifically, the bulls loved that Canopy inked a deal with beverage maker Constellation Brands (NYSE:STZ). With resources in hand, Canopy could drive their expansion, thereby lifting CGC stock.
At least, that was the theory. But in reality, pot stocks – like any other investment class – had to follow the rules. This is where the underlying organization stumbled. Gradually, stakeholders lost confidence in Canopy’s aggressive growth strategies. Furthermore, Canopy had gambled heavily on vaporizer products, months before the current lung illness epidemic. In a panic, CGC stock deflated badly.
However, I have argued that the bears might themselves be too aggressive on CGC stock. Tellingly, prior to the vaping crisis, medical professionals acknowledged that vaping was safer than smoking. And people have been smoking pot for a long time. Therefore, vaping cannabis likely isn’t the culprit of the vape-related epidemic.
Once the facts start coming out, Canopy Growth has a chance for a reprieve. Therefore, you can buy CGC stock before the bullish wave hits.
Cronos Group (CRON)
Prior to the cannabis industry fallout, no one could get enough of pot stocks to buy. Amid this optimistic environment, big tobacco giant Altria Group (NYSE:MO) made a deal with Cronos Group (NASDAQ:CRON). Under the terms, Cronos received $1.8 billion to further their CBD ambitions. On the other end, Altria acquired a 45% stake in CRON stock.
Many analysts have considered Cronos as one of the more reasonable pot stocks to buy. Unlike some rivals, management keeps tighter control of their financials. Additionally, Cronos has made smart acquisitive decisions with their funds, buying out CBD beauty brand Lord Jones. That move essentially gave CRON stock a foothold in the U.S. cannabis market.
Unfortunately from a timing perspective, Cronos also invested heavily in vaping products. But as I mentioned about Canopy, the vaping crisis’ culprit probably lies somewhere else. People have smoked all kinds of strange weed but we’re all only hearing about the lung illness epidemic now.
Based on the available evidence, I fully expect an exoneration of the vaporizer platform. As such, I believe the bearishness in CRON stock is overdone.
Aurora Cannabis (ACB)
Perhaps throwing caution to the wind, management made multiple strategic acquisitions. Because of this mindset, ACB stock has the largest international footprint.
However, in a bear market, the constant expansion comes at a serious fiscal cost. Many analysts, including our own Wayne Duggan, have explicitly warned about the company’s cash burn problem. Since his story was published on July 22, ACB stock has dropped over 45%. As pot stocks continue to lose value, the volatility puts pressure on Aurora Cannabis’ financials.
Admittedly, Aurora is one of the riskiest pot stocks to buy. However, for the patient and iron-willed investor, ACB stock still has a viable pathway forward. That’s because the global cannabis market is increasing, especially in traditionally conservative Asian countries. With the largest international footprint, Aurora is well positioned to advantage this trend, if it can just hold on.
Easily one of the most exciting – albeit under-appreciated – names in the hemp and cannabis industry, cbdMD (NYSEAMERICAN:YCBD) is a name you will surely want to keep track of.
A driving force behind cbdMD’s cannabidiol products is that they don’t contain THC, marijuana’s psychoactive compound. And with the company’s myriad offerings, YCBD stock will likely experience an uptick longer term.
That’s not all. If you take a look at their website, you’ll find that cbdMD-branded products are considerably cheaper than their rival brands. For instance, their 300mg tinctures are priced $29.99, $10 below the listing price of their cheapest competitor, Hemp Fusion. With the high costs of CBD therapies, cbdMD gives you relief for your symptoms and your wallet.
Plus, I love the fact that cbdMD is headquartered in Charlotte, North Carolina. One of the biggest benefits of legalization is that the cannabis industry provides employment opportunities for Americans. As economic uncertainty weighs on the markets, the political motivation for fully legalizing cannabis increases. Thus, I view this development as net positive for YCBD stock.
Auxly Cannabis (CBWTF)
One of the reasons why pot stocks to buy haven’t realized their full potential is the ever-present risk of reality not meeting hype. When Canada became the first G7 member to legalize recreational weed, it bolstered the bullish thesis for companies like Auxly Cannabis (OTCMKTS:CBWTF). But from mundane administrative issues to downright fraudulent actions, Canadian cannabis didn’t live up to people’s exaggerated expectations.
With other harsh realities weighing on the sector, pot stocks largely crumbled. As you might expect, the volatility disproportionately impacted smaller shares like CBWTF stock. But it’s in this backdrop of extreme negativity where we find “Cannabis 2.0.” This is Canada’s second go-around with weed as their government okays new product categories, including edibles, vapes, and topicals.
Will the second attempt prove favorable for CBWTF stock and the broader industry? While I don’t want to get too ahead of myself, I can’t help but feel a little excitement. After all, no one is really hyping Cannabis 2.0, especially with the vaping crisis on everyone’s mind. This is setting up an alluring contrarian play for CBWTF stock.
Origin House (ORHOF)
Formerly known as CannaRoyalty, Origin House (OTCMKTS:ORHOF) is a cannabis firm that made its name through streaming businesses. And while it still generates some revenue through its initial line of work, ORHOF has become a powerhouse in branding.
The proof is in its utter domination of California. Unbeknownst to me prior to this write-up, the Golden State is the world’s largest legal cannabis market. With a title like that, it’s a wonder how anything gets done around here. Joking aside, Origin House boasts more than 450 California-based dispensaries and more than 50 popular brands.
In other words, if you can make it in California, you can make it anywhere. This bodes very well for ORHOF stock. October’s midterm elections proved that legal weed is gaining serious momentum. Inevitably, more recreational markets will open, allowing Origin House to expand its dominating presence.
And that’s just in the immediate sphere of influence. With medical cannabis making inroads in countries like Thailand, South Korea, and Japan, it opens possibilities. Theoretically, Origin House can replicate its branding prowess overseas, which would transform ORHOF stock.
If we graded pot stocks to buy on the sexiness scale, the producers would probably rank very highly. On the lower end of this spectrum would come in the administrators and logistics specialists. Yet no matter how exciting the cannabis industry is, it involves plenty of paperwork. And that’s where Marimed (OTCMKTS:MRMD) and MRMD stock comes into play.
In a crowded field, Marimed’s biggest advantage is its highly demanded consultation services. Covering everything from licensing application support to facilities management, MRMD provides relevant and critical insights for budding entrepreneurs. Plus, in my opinion, Marimed levers one of the brightest and well-rounded leadership teams in the marijuana industry.
Sure, it’s the boring work of a groundbreaking industry. Still, it’s got to get done, which drives the case for MRMD stock.
Furthermore, MRMD stock has taken an absolute beating this year. But with the cannabis products increasing in adoption, now might be an ideal time to pick up shares on discount.
Aleafia Health (ALEAF)
Broader and sector weakness has hurt virtually all marijuana stocks. However, lesser-known names have experienced disproportionate pain. Unfortunately, this is something that Canadian cannabis firm Aleafia Health (OTCMKTS:ALEAF) knows all too well.
But despite its severe market loss last year and its sharp decline in the year so far, ALEAF stock offers a speculative opportunity for risk-takers. For starters, the underlying company features the largest network of referral-only medical cannabis clinics in Canada. Furthermore, their patient base continues to increase as the industry gains social recognition and acceptance.
Management has also invested heavily in cultivation facilities, targeting an annual growing capacity of 98,000 kilograms in 2019. Plus, with Cannabis 2.0 soon approaching, ALEAF stock has coincidentally slowed its descent. For the contrarian, this may present a great chance to buy into a compelling medical name.
Diego Pellicer Worldwide (DPWW)
We’ve arrived at the end of our journey regarding marijuana stocks to buy in 2019. In keeping with my loose tradition, I like to throw in an extremely speculative name. And don’t roll your eyes at me: you know you want to know!
The following idea comes from an InvestorPlace reader named Anthony. He asked my opinion regarding Diego Pellicer Worldwide (OTCMKTS:DPWW).
My answer to him is the same one I’m giving to you, which is that DPWW stock is extremely risky. Aside from its distressingly low trading volume and market capitalization, Diego Pellicer lacks the financial strength to convincingly pull off its licensing and royalties business model.
However, I’m intrigued by its premium branding business. Not that I would know, but Diego Pellicer specializes in high-class cannabis products. As companies like Origin House and Medmen have proven, cannabis users eschew quantity for quality. That could lead to a surprising turnaround for DPWW stock.
Or you can lose every cent that you put in.
As of this writing, Josh Enomoto is long MRMD and ALEAF.