Investors searching for marijuana stocks to buy are looking to get green. So how can investors identify stocks that will “get green?” From investors’ perspective this should likely relate to price appreciation. However, there is no exact formula for price appreciation. But there are fundamental, technical and other indicators which catalyze stocks to rise in price. From my perspective that means sales, deal making and execution of strategic vision are the factors which most strongly predict success.
Investors looking for marijuana opportunities ultimately want to know which stocks have those proper factors for success in place. So the marijuana stocks to buy listed here will have one or more of the factors which predict success above.
- AbbVie (NYSE:ABBV)
- GW Pharmaceuticals (NASDAQ:GWPH)
- Cresco Labs (OTCMKTS:CRLBF)
- GrowGeneration (NASDAQ:GRWG)
- Green Thumb Industries (OTCMKTS:GTBIF)
- Village Farms International (NASDAQ:VFF)
Let’s take a closer look at what makes each of these stocks worth your consideration.
Marijuana Stocks to Buy: AbbVie (ABBV)
AbbVie is no longer producing cannabis-derived synthetic drugs after having sold Marinol in late 2019. However, the company held 59 medical cannabis patents as of 2019. AbbVie is the No.1 holder of such patents.
So, while AbbVie is not a marijuana producer, nor would it be considered a marijuana stock, it’s in the space. ABBV stock is well-regarded itself. InvestorPlace writer Mark R. Hake, CFA makes an excellent case as to why it is a worthwhile investment in his article. With its dividend and well-run operations, ABBV stock is an excellent choice for investors looking to avoid volatile pure cannabis plays.
GW Pharmaceuticals (GWPH)
GW Pharmaceuticals is an established cannabis pharmaceutical company. On Aug. 3 the company received Food and Drug Administration approval for its cannabidiol drug Epidiolex. Epidiolex treats tuberous sclerosis complex (TSC) and Lennox-Gastaut syndrome (LSG). There are 50,000 patients with TSC worldwide, 85% of whom develop seizures which Epidiolex is indicated for. With a maintenance dose of 25 mg/kg/day for TSC patients, and a cost of $1,377/100ml (3) revenues should remain strong. Q2 ‘20 U.S. revenues for Epidiolex were $111 million.
GW Pharmaceuticals also has a strong pipeline of cannabinoid drugs in development. Although GW has not received FDA approval for these, their potential is clear. GWPH stock is in a strong position to make money for investors.
Cresco Labs (CRLBF)
Investors who know the name Cresco Labs are bullish on it currently. And they should be. It just reported record revenues of $94.3 million equating to 42% growth quarter-over-quarter. Further, the company is a vertically integrated multi-state U.S. cannabis operator. Of the 13 analysts covering CRLBF stock, 12 rate it a buy.
The company’s operations looked really strong. This company is not simply a cannabis hype story. However, the industry as a whole has not lived up to the hype because many operators were not doing what Cresco has: run a tight operation.
Although Cresco Labs still has room for improvement and reported a net loss, revenue should encourage investors looking for marijuana stocks to buy.
GRWG stock recently spiked after having traded flat for the previous few years. The firm has 28 locations in 10 states. Moreover, it is the largest hydroponic equipment supplier in the U.S. GrowGeneration had a strong quarter. It posted record revenues of $43.5 million, EBITDA of $4.6 million, and $2.6 million in net income.
GrowGeneration increased guidance for 2020 revenue to between $170-$175 million. It set 2021 revenue guidance between $245-$260 million. Investors know that these metrics indicate a company worth investing in. GrowGeneration’s strategy of selling shovels to the gold miner certainly seems to be paying off so far. Many companies have exploded utilizing this strategy. GRGW stock could well be another.
Green Thumb Industries (GTBIF)
Investors could be forgiven for guessing it operates in a similar niche with GrowGeneration based on its name. However, it is a cannabis CPG company, and not an equipment supplier.
Again, investors should concern themselves with revenue when considering marijuana stocks. The cannabis/marijuana space is volatile because there have been so many operators pumped up on hype alone. Now that the industry is cooling, real operators are starting to emerge. And real operators are going to show strong sales and revenue growth.
Fortunately, Green Thumb Industries looks to be one of them. Its recent earnings were strong. Year-over-year revenues increased by 167.5% to $119 million. Further, Green Thumb Industries’ first half 2020 revenues exceed 2019’s total revenues.
Analysts are bullish on GTBIF stock with 15 rating it a buy, and 2 having it overweight.
Village Farms International (VFF)
Village Farms is primarily a greenhouse produce grower. It is a large vertically integrated company with a 9 million square foot greenhouse footprint in British Columbia, Ontario, Mexico, and Texas. The company is leveraging 3 decades of experience in greenhouse produce production and expanding into cannabis and hemp.
The company has a majority ownership position in British Columbia cannabis grower Pure Sunfarms. It has also established several joint ventures for CBD and hemp production across the U.S. Analysts are bullish on VFF stock, with five rating it a buy and one rating it overweight.
Much like ABBV, VFF stock is not a pure marijuana play. Clearly its greenhouse produce experience is a very short pivot. Further, its logistics network should be a benefit as well. The company’s investor presentation should give investors a good idea of its scale and operations. The company has many assets across the industry which it will be able to leverage.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing. Alex Sirois did not hold any shares of stocks mentioned in this article as of writing.