The cannabis industry has captivated both investors and consumers in recent years. Amidst its diversity, certain standout companies have made their mark by prioritizing people’s well-being and striving for sustainable growth. Investors have long awaited federal-level cannabis legalization, a significant potential growth catalyst for this space. Yet, even without it, the industry’s growth prospects have remained robust. Medical cannabis usage is on the rise, and state-level legalization efforts have led to strong growth prospects for various promising cannabis stocks.
While valuations certainly got out of hand during the previous mania, tied to Canadian federal legalization around five years ago, there appears to be increasing interest in this sector from investors waiting for the next valuation expansion period.
These are three of the best-positioned cannabis stocks for those looking to take a bullish position on this sector. These companies are among the more dominant players in the publicly-traded space.
Tilray Brands (TLRY)
Tilray Brands (NASDAQ:TLRY) is a major participant in the cannabis industry, specializing in cannabis lifestyle products and consumer goods. Their array of well-received brands includes Good Supply, RIFF, Solei, Canaca, The Batch and Chowie Wowie. Recent acquisitions, such as Redecan, Original Stash, HEXO and Bake Sale, enrich their offerings. Strategic collaboration with Great North Distributors enables widespread coverage throughout Canada.
Tilray Brands’ stock surged 60% in the past month, supported by robust financial results, surpassing revenue and earnings expectations. The momentum is likely to continue due to this impressive rally. In the financial year 2023, Tilray achieved $627 million in revenue, marking a significant improvement in adjusted free cash flow of nearly $200 million compared to the previous year. Tilray’s focus on cost-cutting and operational efficiency positions it to report positive free cash flows for 2024.
In general, the financial performance demonstrates a significant reduction in net losses, dropping to $120 million in Q4 from $458 million in the previous year. Furthermore, adjusted EBITDA surged by an impressive 93%, reaching $22 million in the most recent quarter. This is easily one of the top cannabis stocks on the market today.
Canopy Growth (CGC)
Canopy Growth (NASDAQ:CGC) is a key player in the cannabis sector, recognized for its wide array of cannabis items like oils and gummies. With divisions like Spectrum Therapeutics and Wana Brands, they have a solid foothold in North America, making them a popular choice for cannabis investment. While they faced a loss of $1.28 per share in the last quarter, they remain hopeful, implementing cost-saving strategies projected to cut expenses by $240 million to $310 million by 2024.
With notable advantages, this company stands out. Insider ownership is high at 33.53%, indicating management’s alignment with shareholders. Analysts predict an 88% surge in EPS next year. Notably, a recent positive development involves partnering with Indiva to distribute Wana cannabis gummies in Canada for five years.
Cronos Group (CRON)
Cronos (NASDAQ:CRON) stands as one of the most undervalued penny stocks with a market valuation of $745 million. Its Q1 2023 cash and equivalents of $836 million underline this undervaluation. Beyond its robust cash position, Cronos is making strategic improvements, targeting positive cash flow by 2024. Moreover, the company has attracted external interest, hinting at potential merger and acquisition opportunities.
Despite a $4.9 million drop in Q1 2023 results from the prior year, the company’s focus remains on long-term growth. Encouragingly, full-year projections target a net income range of $100 million to $110 million. The aim of achieving positive cash flow by 2024 underscores their commitment to financial sustainability.
Cronos prioritizes transparency and investor communication, outlining future expectations. While a cash flow decrease is anticipated in the latter part of 2023, the company maintains confidence in managing this decline.
On the date of publication, Chris MacDonald did not have (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.
