Investing in marijuana stocks has been anything but smooth lately. The cannabis industry was no more immune to the novel coronavirus than the rest of the wider markets. However, that doesn’t mean it’s time to abandon pot stocks altogether.
The story of 2020 is still unfinished, and there’s comeback potential for a number of stocks in the cannabis sector.
If anything, the price pressure has created some excellent buying opportunities. These 4 marijuana stocks to buy are particular standouts among the sector:
If you plant your seeds today, they just might bear fruit in the second half of 2020. So let’s take a closer look at this premium selection of high-potential marijuana stocks.
Marijuana Stocks to Buy: Aphria (APHA)
If you’ve been waiting for a compelling entry point in APHA stock, this is probably as good as any. A trailing 12-month price-to-earnings ratio of 14.65 suggests that the shares present a very fair value at present. And if the stock breaks through the $10 level, the sky’s the limit.
A major part of Aphria’s turnaround story is the company’s debt-reduction plan. Not long ago, Aphria entered into an agreement to repurchase around 127.5 million CAD worth of its senior debt notes.
As the company explains, this transaction should improve Aphria’s balance sheet. Potentially, the transaction could increase Aphria’s net cash position to 163.8 million CAD. This should provide some comfort to embattled APHA stockholders as the much-needed cash can put Aphria in a more competitive position going forward.
Traders view HEXO as one of the most affordable pot stocks available on the market. And after the coronavirus outbreak, HEXO shares became not only affordable, but also cheap on a historical basis. But is there a reason to be optimistic now?
The company’s third fiscal quarter results would suggest that there’s plenty of reason to be hopeful. Hexo reported quarterly sales of 9,338 kilograms of product as measured by adult-use cannabis gram and gram equivalents. That’s a 42% improvement over the comparable sales reported during the company’s second fiscal quarter.
With this data, Hexo stated that “Newly launched products such as hash and oil extract drops also contributed to overall adult-use sales growth.” Hopefully HEXO stock investors can count on the company to continue its product-line expansion as well as its upward trajectory in sales growth.
Cronos Group (CRON)
A position in CRON stock is a great way to capitalize on the emergence of Cannabis 2.0. That’s the nickname given to cannabis derivatives, which would include vaping products. And Cronos Group recently launched two brands in this genre, Spinach and COVE.
As CEO Michael Ryan Gorenstein elaborates, “COVE, our premium brand, launched an elegant vaporizer pen, while the Spinach line was inspired by sought-after strain-specific terpene profiles.” These are premium vaping products with high-quality components and rechargeable draw batteries.
Besides, CRON stock sports an ultra-low trailing 12-month price-to-earnings ratio of just 2.41. This presents a rare chance to grab shares of a serious Cannabis 2.0 contender at a highly favorable price point.
Aurora Cannabis (ACB)
Many traders would say that ACB is marijuana-stock royalty. It’s one of the world’s biggest cannabis companies and should be able to weather the Covid-19 storm better than Aurora’s smaller competitors. Plus, the company recently earned nods of approval from a pair of prominent analysts.
The first comes from Cantor Fitzgerald analyst Pablo Zuanic. He increased his price target on ACB stock from 27 CAD to 29 CAD. Zuanic also reiterated his “overweight” rating on the shares, citing Aurora’s cost-cutting measures. For instance, the company announced 25% reduction in Aurora’s corporate staff over a six-month period.
Also, analysts at Stifel upgraded ACB stock from “sell” to “hold” recently. Noting Aurora’s “market share gains” and the “stronger Canadian market trends,” Stifel analysts raised their price target on the stock from 6.20 CAD to 17.50 CAD. With these upgrades in mind, Aurora’s shareholders should remain confident in a stock-price rebound in the near future.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.