2020 was a challenging year for most industries, but for the cannabis business, the year turned out to be arguably its best to date. Sales of medical and recreational marijuana products rose impressively in mature and emerging markets across the North American region. Additionally, many consider 2020 to be a turning point for the industry, as several states in the US legalized cannabis in some form. Therefore, marijuana stocks could be this decade’s most compelling growth story.
Overall, 2021 is likely the year where we see major reform in the cannabis industry. In fact, Senate Majority Leader Charles Schumer and Senator Cory Booker have stated that cannabis reform will be a priority this year.
Moreover, five states voted to legalize marijuana on election day, and the House has recently passed the MORE and Medical Marijuana Research Act. This is likely to lead to a domino effect, which will further normalize the industry. A recent New Frontier Data report highlighted that legal cannabis sales in the US alone could jump to $41.5 billion by 2025.
Having said that, let’s look at some of the best marijuana stocks in the market at this time.
- Aphria (NASDAQ:APHA)
- Cresco Labs (OTCMKTS:CRLBF)
- Cronos Group (NASDAQ:CRON)
- Curaleaf Holdings (OTCMKTS:CURLF)
- Green Thumb Industries (OTCMKTS:GTBIF)
- Planet 13 Holdings (OTCMKTS:PLNHF)
- Trulieve Cannabis (OTCMKTS:TCNNF)
Now, let’s dive in and take a closer look at each one.
Hot Marijuana Stocks: Aphria (APHA)
Canadian cannabis giant Aphria has been the pick of the licensed marijuana producers in Canada, growing by 32% in 2020. It boasts one of the most robust balance sheets in the sector and the industry’s largest cultivation capacity. Moreover, it plans to expand its total addressable market with its planned merger with another Canadian marijuana producer Tilray (NASDAQ:TLRY). Thus, APHA stock is among the best investments in the sector today.
Additionally, earning results have held up incredibly well despite the challenges posed by the global pandemic. It posted record revenues of $160.5 million in its most recent quarter, with an adjusted EBITDA of $12.6 million. More importantly, its free cash flows were up $70 million in the quarter. As we advance, the company has set its sights to expand beyond the North American region with its supply agreements and strategic acquisitions.
Cresco Labs (CRLBF)
As a U.S.-based multi-state operator (MSO), Cresco Labs is among the “Big 4” cannabis operators. And while CRLBF stock has underperformed compared to its peers, the firm’s business performance had been stellar in 2020. Its sustained growth is driven by its effective retail and whole strategy, which helped increase sales in the first three quarters of 2020.
The company is arguably the most successful in its peer group, growing revenues by triple-digits. In its third quarter, top-line improved by a whopping 324% year-over-year (YOY) and it posted a net profit for the first time. Its business’s distinguishing factor is its focus on its wholesale channel, which generated $90.5 million in revenues in its most recent quarter.
Additionally, the acquisition of Origin House in 2019 gave it a robust distribution footprint in California — the world’s largest regulated cannabis market. And since then, it continues to expand its distribution footprint across other states through strategic agreements and acquisitions.
Hot Marijuana Stocks: Cronos Group (CRON)
Canadian pot stock Cronos Group is among the most cash-rich marijuana producers in the world. It has $1.3 billion in cash, which is due to $1.8 billion equity investment from Tobacco giant Altria (NYSE:MO) back in 2018. The company has had a patchy earnings track record, but revenues appear to be picking up again.
Third-quarter results were highly encouraging for the company, with a 96% increase in revenues on a YOY basis. Growth was driven primarily by rising demand in the adult-use Canadian cannabis market and the Israeli medical cannabis market.
Also, the company has done well to diversify its product line — such as the acquisition of Lord Jones, a cannabidiol-based beauty brand, for $300 million. However, supply bottle-necks have impacted the growth of its high-margin vape products. Overall, though, CRON stock has impressive growth drivers that are likely to expand revenues by substantial margins this year.
Curaleaf Holdings (CURLF)
U.S.-based MSO Curaleaf Holdings is the largest cannabis company in the country. According to experts, the company could become the first pot stock to hit $1 billion in sales by the end of 2021. Its acquisition of another MSO in Grassroots and other related acquisitions provides it the edge over its competition in terms of scale. With more states legalizing cannabis in 2021, expect CULRF stock to deliver exceptional returns to its investors.
Furthermore, earnings results have been exceptional for the company in the past year. In its most recent quarter, revenues rose 195% YOY with an adjusted EBITDA of roughly $42 million. Though it posted a modest profit in the quarter, profitability will rise substantially by 2022 as EBITDA margins expand with maturing states. Its massive scale puts it in a great position to take advantage of newly legalized states.
Hot Marijuana Stocks: Green Thumb Industries (GTBIF)
Green Thumb Industries is among the top U.S.-based cannabis MSO’s with a consistent earnings track record in the past couple of years. It has now generated upwards of $100 million in revenue the past three quarters. That said, capacity expansions and greater legalization will help GTBIF stock post substantial returns for its investors in the near future.
The company delivered strong results in its third quarter, with a 131% growth in YOY revenues. Growth was primarily driven by its branded product sales, which the company continues to expand with every passing year. It has also undertaken capacity expansion projects in Pennsylvania, Illinois and Ohio.
Moreover, the company recently raised $100 million from a single institutional investor to list on the U.S. stock markets. Therefore, with a healthy cash balance and a potent product mix, GTBIF stock is one of the more attractive investments in the industry.
Planet 13 Holdings (PLNHF)
Planet 13 is a Nevada-based cannabis company that is among the hottest MSO’s in the country. It has its flagship SuperStore in Las Vegas, and plans to open up another outlet in Santa Ana, California. In fact, it plans to open up new outlets in first-tier cities in the next five years. That said, PLNHF stock has grown by a whopping 36% thus far in 2021.
Apart from its second quarter, its earnings track record was mostly excellent in 2020. Third-quarter results were most particularly impressive, where it registered a record revenue of $22.8 million despite Las Vegas operating at limited capacity.
Moving ahead, in 2021, analysts are expecting revenues of almost $128 million this year. And with multiple new locations in the pipeline and its new California outlet, expect revenues to increase significantly this year.
Hot Marijuana Stocks: Trulieve Cannabis (TCNNF)
Florida-based Trulieve Cannabis is one of the best-performing cannabis MSO’s in the country. It has a pristine balance sheet and sustainable competitive moats, which guarantee growth for the foreseeable future. Additionally, its expansion into other states is likely to prove fruitful for it in the coming years. Thus, TCNNF stock is one of the most promising marijuana stocks at this time.
Furthermore, earnings have been stellar for the company for the past couple of years. The novel coronavirus has done little to slow down growth, as it posted triple-digit growth numbers for the better part of 2020. In its most recent quarter, revenues shot up 93% YOY. EBITDA profits reached an impressive $67.5 million in the third quarter.
Additionally, the company plans to take advantage of the growing markets in newly legalized states with its aggressive expansion strategy. Therefore, TCNNF stock is one of the most auspicious marijuana stocks at the moment.
On publication date, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.