Cannabis stocks are far from creating sustainable values. There have been two instances when cannabis stocks have skyrocketed on hopes of robust growth and legalization in the last five years. However, the big rally has been followed by a deep correction. Having said this, I am bullish on a few cannabis stocks to buy and hold for multibagger returns.
There are two reasons for this view. First, the global cannabis market is valued at $57.18 billion for the year. It’s expected that the market size will swell to $444.34 billion by 2030. Even if there is no federal level legalization of cannabis, the market size will continue to swell. Therefore, the best part of growth for cannabis companies is due.
Furthermore, some of the major cannabis companies have gone through an extended period of cash burn. With cost cutting and operating leverage, there are few that expect to deliver positive operating and free cash flows. This is likely to translate into shareholder value creation.
I would therefore consider the best cannabis stocks to buy and hold. With multiple positives, these stocks can be massive value creators.
Cronos (CRON)
Cronos (NASDAQ:CRON) is among the top cannabis stocks to buy and hold for multibagger returns. At current levels of $1.77, CRON stock seems massively undervalued and is poised for a strong reversal rally.
A major reason to like Cronos is a strong balance sheet. Currently, the company has $841 million in cash and equivalents. This cash can be deployed to pursue aggressive expansion when regulatory headwinds wane.
Another positive catalyst for Cronos is its presence in the medicinal cannabis business. Israel is a leader in research and development in the medical cannabis industry. Cronos has recently entered a joint venture with a food company named Kibbutz Gan Shmuel in the country. This partnership will help Cronos expand its presence in Europe.
With cost cutting initiatives, Cronos expects to deliver positive cash flows in 2024. Therefore, I expect the company’s financial flexibility to improve further. Besides aggressive expansion, this will help in boosting investments in innovation.
Tilray Brands (TLRY)
Tilray Brands (NASDAQ:TLRY) is another cannabis stock that’s poised for multibagger returns. The company commands a leadership position in the recreational cannabis market in Canada.
However, with regulatory headwinds, the company has diversified for growth. In the last 12 months, Tilray has made several acquisitions in the alcohol and beverages space.
The most recent acquisition of Truss Beverage (57.5% stake) will provide the company with an opportunity to cater to 10.6 million potential consumers in Canada. Tilray is positive on the regulatory shift in Canada, which would enable them to take advantage of the THC beverages and cannabinoid-based beverages segment.
Prior to this, Tilray acquired eight beer and beverage brands from Anheuser-Busch (NYSE:BUD). Besides gaining market share in the craft beer industry in the United States, Tilray is also boosting its strategic infrastructure. This will help in pursuing aggressive growth on potential federal level legalization of cannabis. Overall, with acquisitions and improving margins, TLRY stock is positioned to create value.
Curaleaf Holdings (CURLF)
It’s expected that the cannabis market in the United States can touch $71 billion by 2030 even with federal level legalization. It makes sense to hold cannabis companies with strong presence in the country. Curaleaf Holdings (OTCMKTS:CURLF) is one stock that looks attractive.
As an overview, Curaleaf currently operates in 19 states in the U.S. Additionally, the company has expanded operations to eight European countries. Therefore, with a big addressable market, the company is positioned to accelerate growth.
Another growth catalyst is the company’s focus on research and development. Last year, Curaleaf launched 171 new products. The company continues to expand its product offering with the recent launch of Select Liquid Diamonds. It’s worth noting that Select Briq was launched in July and clocked $1 million in retail sales in less than two weeks. With these positives, CURLF stock looks attractive to buy and hold for the next five years.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
