One of the most controversial market segments, adventurous investors may nevertheless benefit from the best CBD stocks to buy. Known officially as cannabidiol, CBD is the second-most prevalent active ingredient in the cannabis plant, according to Harvard Health. However, properly extracted CBD contains less than 0.3% tetrahydrocannabinol (THC) content, marijuana’s psychoactive compound.
Does that mean the top CBD stocks should escape legal scrutiny? Generally yes, although investors should realize it’s a tricky environment to navigate. According to Buscher Law LLC, the 2018 farm bill did not impact individual states’ mandates regarding hemp-derived CBD. Therefore, you don’t want to make the mistake of assuming that cannabidiol is legal in all 50 states.
Still, as the Pew Research Center pointed out late last year, overwhelming support exists for medical and recreational legality. With that being the case, the below ideas for CBD stocks to buy could be intriguing for speculators.
Green Thumb Industries (GTBIF)
Based in Chicago, Illinois, Green Thumb Industries (OTCMKTS:GTBIF) promotes well-being through the power of cannabis. Per its website, Green Thumb seeks to leverage the cannabis plant’s potential to improve health, happiness, and comfort. At the moment, Green Thumb carries a market capitalization of 1.96 billion CAD (or about $1.45 billion). Since the start of the year, GTBIF has given up over 17% of its equity value.
In the spirit of full disclosure, investment data aggregator Gurufocus warns that Green Thumb may be a possible value trap. Certainly, it doesn’t command the most enticing financial statistics. However, based on longer-term trends, Green Thumb commands an intriguing growth machine. Specifically, the company’s three-year sales expansion rate (per-share basis) clocks in at 57.2%.
Also, despite the choppiness in the charts, Wall Street analysts peg GTBIF as a consensus strong buy. This assessment breaks down into seven buys, one hold, and zero sell ratings. Additionally, the experts’ average price target lands at $15.79, implying almost 130% upside potential. Thus, it could be one of the best CBD stocks to buy.
High Tide (HITI)
Hailing from Calgary, Alberta, Canada, High Tide (NASDAQ:HITI) bills itself as the leading community-grown, retail-forward cannabis enterprise. Like Green Thumb Industries above, High Tide commands the directive of unlocking the full value of the controversial plant. As part of its advantages, the company’s website highlights its growth machinery and unmatchable scale. Since the beginning of this year, HITI has fallen almost 16%.
Despite its diminutive nature – it only carries a market cap of 127.65 million CAD or about $94.2 million – High Tide lives up to some of its hype. No, I wouldn’t say that the firm enjoys sterling financials. After all, Gurufocus warns it’s another possible value trap. Still, High Tide prints a three-year revenue growth rate of 33.9%. During the same period, its EBITDA growth rate clocks in at 31.8%.
Lastly, analysts view HITI as a unanimous strong buy (among four expert opinions). Moreover, the average price target comes in at $4.16, implying 225% upside potential. Given the perfect consensus, HITI could be one of the top CBD stocks to buy.
Verano (VRNOF)
Headquartered in Chicago, Illinois, Verano (OTCMKTS:VRNOF) is both a cannabis business and industry advocate. Per its website, Verano seeks to prove that cannabis can and should be better. Throughout its presence on the Internet, the company emphasizes the potential wellness benefits associated with CBD and similar cannabis products. Since the beginning of this year, VRNOF slipped nearly 11%. In the trailing year, it’s down almost 54%.
Granted, Verano is another small enterprise, carrying a market cap of 1.26 billion CAD (or roughly $930 million). Not surprisingly, it too doesn’t carry the most sterling financial profile. Again, Gurufocus warns that it’s a possible value trap. However, it’s steadily gaining ground following its early growth phase. For example, in the second quarter, Verano posted $234.1 million in revenue, up nearly 5% against the year-ago level.
On a final note, analysts also peg VRNOF as a unanimous strong buy. Moreover, the average price target hits $10.23, implying over 276% upside potential, making it one of the best CBD stocks to buy for speculators.
On the date of publication, Josh Enomoto 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.
