It’s been quite a year already for marijuana stocks. The ETFMG Alternative Harvest Exchange Traded Fund (NYSEARCA:MJ) that tracks the industry has more than doubled since the beginning of January, rising 132% to a peak of more than $34 on Feb. 10.
While it is true that marijuana stocks have been targeted by retail investors on the Reddit forum r/WallStreetBets in recent weeks, the sector as a whole has been climbing since President Joe Biden was elected last fall. Biden’s election spurred renewed hopes that the recreational drug will be legalized at the federal level in the U.S.
While the r/WallStreetBets boost seems to have quickly fizzled, many marijuana stocks continue marching higher.
In this article, we look at four marijuana stocks that continue surging higher.
- Tilray (NASDAQ:TLRY)
- Canopy Growth (NASDAQ:CGC)
- Aurora Cannabis (NYSE:ACB)
- Sundial Growers (NASDAQ:SNDL)
Marijuana Stocks That Are Surging: Tilray (TLRY)
Among marijuana stocks, Canadian producer Tilray has posted the strongest performance so far in 2021. TLRY stock has risen as much as 610% in the first six weeks of the year, from just $9 at the start of January to a high of $63.91 on February 10. While the share price has since retreated, it remains up 250% year-to-date at its current level of nearly $30.
Tilray has been on a tear ever since the company announced plans to merge with rival Aphria (NASDAQ:APHA), a $4 billion deal that will make Tilray the largest of the Canadian marijuana producers. The merger has also prompted speculation of further consolidation among marijuana companies.
Tilray has also benefited from the relaxing of laws pertaining to both medical and recreational marijuana use, as well as a restructuring of its business. Prior to the announced merger with Aphria, Tilray cut 10% of its workforce and closed several production facilities in order to realign its business and stem losses.
The company is not yet profitable, but its balance sheet is improving. Fourth-quarter revenue announced this month was $56.6 million beating analysts’ estimates of $55.55 million.
Canopy Growth (CGC)
Speaking of losses, Canopy Growth, which is currently the world’s largest recreational marijuana producer, posted another lackluster quarter recently as the company struggles to right its own ship.
Fiscal third-quarter revenue rose 23% to $152.5 million, which exceeded analyst expectations. However, the company warned that it remains a year or more away from becoming profitable. The Smiths Falls, Ontario-based company said its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss amounted to $68 million in the most recent quarter, compared to a $97 million loss the previous year.
Canopy Growth now expects to achieve profitability in the second half of 2022.
Despite its continued struggles, CGC stock has performed well, up 56% year-to-date to $38.60 a share. While Canopy Growth has struggled over the past two years with industry competition, a robust black market and a clumsy government legalization effort in Canada, analysts seem to be optimistic that the company has finally turned a corner.
In 2020, Canopy Growth let go 220 employees and scaled back operations in order to achieve $200 million in annual cost savings. Those cost savings should help lift the company and CGC stock moving forward.
Aurora Cannabis (ACB)
Shares of Aurora Cannabis popped recently after the company released second-quarter 2021 figures that were not as terrible as analysts and investors expected. The Edmonton, Alberta-based company’s net revenue came in at $53.3 million, which was 23% higher than the same period of 2019.
And Aurora Cannabis’ net loss came in at $238 million, or $1.37 per share. This put it between the first-quarter shortfall of CA$106 million CAD ($83 million) and the 1.3 million CAD ($1 million) of the year-ago quarter.
While the loss was in line with analysts’ expectations, the company did report that sales of recreational marijuana rose 25% and sales of medical marijuana was up 42% on a year-over-year basis. The improving sales and earnings have helped ACB stock to climb 47% so far in 2021 to its current level of $12.20 a share.
The company has announced plans to focus going forward on higher-priced premium marijuana products. That shift to premium cannabis looks good on paper, but some analysts remain skeptical of the approach and have downgraded the stock in recent weeks.
Sundial Growers (SNDL)
At the start of the year, SNDL stock was trading at 55 cents a share and at risk of being delisted by the Nasdaq stock exchange. It was a bottom feeder among penny stocks.
Today, the stock is up 222% to $1.50 a share. It was as high as $2.95 a share on Feb. 10. The Calgary-based company’s stock has held onto most of its gains despite extreme volatility and being squeezed by the Reddit crowd.
Long-term investors have been attracted to Sundial Growers by the company’s move into edible marijuana products and also the fact that it appears to have avoided being delisted by managing to keep its share price above $1 a share for 10 consecutive trading days. The company is hoping to take advantage of the appreciation in its share price by issuing more stock.
While the company remains an underperformer among Canadian marijuana companies, SNDL stock continues to move in the right direction.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.