Where do investors love to put their money? The answer? A rapidly growing industry, or more specifically Canadian marijuana stocks. The federal legalization of recreational cannabis in Canada in 2018 and medical cannabis in 2001 was a contributing factor to its success.
Since the legalization of cannabis, Canadian cannabis companies are looking towards their neighbours – the United States to merge with several new cannabis legal markets. And, they have already sealed a few large deals. CannabisTech reports that “in May 2020, Aurora announced its purchase of US-based CBD brand Reliva.” With prior sinking stocks, this played a major role in reviving the company’s profitability.
In the meantime, more mergers continue to take place under the radar without major Canadian cannabis news reporting on the deal acquisitions. This could be due to the legal laws surrounding recreational weed in the United States that still varies from state to state.
Either way, the Canadian marijuana market could witness large-scale success when Cannabis is legalized federally in the U.S. Meanwhile, investors should keep a close watch on the marijuana stock market and be savvy about the best companies and weed stocks to invest in Canada at the moment.
Cannabis Companies and Mergers Leading The Stock Market Right Now
While the decriminalization of cannabis is gathering momentum internationally, there is still a lot of grey area to contend with. With that said, making a cannabis investment with Canadian marijuana stock is a wiser logical investment given that the cannabis scene in Canada has been evolving since medical marijuana was legalized back in 2001.
So while investing in marijuana stock still has its risk (as with any other stock investment) the projections of cannabis industry growth seem promising, and worth the gamble. Saying that, here are the best Canadian cannabis investments to invest with or to follow closely in the year 2021.
Aurora Cannabis
Valued at 2 billion dollars, Aurora cannabis and is one of the earliest traded weed stocks. It primarily focuses on medical marijuana and sells it in two forms: dry cannabis and cannabis oil. According to Investopedia, in May 2018, Aurora Cannabis purchased MedReleaf for $2.5 billion as well as acquiring organic producer Whistler Medical Marijuana Corporation in 2019. In its last fiscal quarter, which concluded at the end of December Aurora cannabis’ revenue rose 42% year over year as cannabis sales soared by a breath-taking 562%. The number of consumers of Aurora Cannabis products also rose to 25% last quarter as compared to the same period in the prior year. The stock price is down 59.6% year to date.
Aphria (APHA)
Aphria has an estimated market capitalization of 6 billion dollars. It is one of the two Canadian marijuana stocks with profits over the last 12 months. Aphria’s shares have hit an all-time high with 700% growth year over year. And, just to clarify the margin of growth, Aphria’s revenue rose by 24% for the same period a year before.
Canopy Growth Corp (CGC)
Canopy Growth Corp is the largest of the Canadian marijuana stocks by market cap. It is valued at over 12 billion dollars. It is a vertically integrated business (which is a great strategy to monopolize the market), producing, selling, and distributing cannabis. Furthermore, it still sells other products—not limited to marijuana— as it still owns other different brands. Its stock is up about 17% year to date.
Cronos Group (CRON)
Cronos Group was touted as Canada’s first unicorn in the marijuana market. Cronos Group has a 3.65 billion market cap and the highest revenue growth of any Canadian marijuana stock. The growth was driven by the nearly tripling of sales through expansion on non-U.S markets. Its pot stock soared 133% in the fourth quarter of 2020 and had sales escalate from 4.6 million dollars to 13.5 million years over the year. Its weed stock has risen by about 2% year to date.
Tilray (TLRY)
Tilray is the largest cannabis company by revenue in the world. It is a big player in the marijuana market with operations in 16 countries and a global contributor to the long-term expansion of the marijuana industry. Tilray is a well-capitalized early entrant in several global markets, and it aims at making a merger with Aphria soon enough. Its market cap is 4.7 billion dollars. Its stock value fell down by 2.22%.
Namaste Technologies Inc.
The main focus of Namaste Technologies Inc. is on the e-commerce side of the medical marijuana business. It operates in 20 different countries and has a market capitalization worth over 58 million dollars. Its weed stocks have declined 38.7% a year to date.
Emerald Health Therapeutics
Emerald Health Therapeutics is a producer of dry cannabis and cannabis oils for medical use based out of British Columbia. It has a market capitalization value of over 39 million dollars. Its stock value has also dropped by about 17% since its inception.
Hexo
Hexo is one of the biggest producers in both the adult-use (recreational) and medical market of cannabis under one brand. According to its website, “HEXO products are grown and processed in state-of-the-art facilities at our campus in Masson-Angers, Quebec, about 30 minutes from Ottawa.”
With a recent acquisition of competitor Zenabis Global in a $235-million deal, according to CBC, this merger will give Hexo “a European foothold and strengthen its domestic business.” Marketbeat reports that when the COVID-19 hit, “HEXO’s stock was trading at C$1.27 on March 11th, 2020, HEXO stock has increased by 641.7% and is now trading at C$9.42.”
Pros and cons of adding Canadian marijuana stocks to your portfolio
The advantages of trading in weed stocks include are:
- It is a thrilling ride as it is new in the industry.
- It has room for incredible growth.
- It is a stock you might believe in if one is conscientious.
The risks of investing in weed stocks are:
- A death of capital as banks may be reluctant to provide the capital for cannabis investment.
- It is too speculative.
- It may lead to an overabundance of producers meaning competition to secure a solid share market will lead to loss of profitability and decrease stock values.
Investing in Marijuana Stocks. Yay, or Nay?
Stocks are unpredictable. It’s the nature of the game. Essentially, the biggest risk in investing in cannabis stock is that growth won’t occur. However, given the exponential growth of the global marijuana market in the past few years, it seems more likely that stocks will reflect the expansion of a lucrative industry. In any case, investing in marijuana stocks may be a smart way to diversify your portfolio while keeping tabs on an industry that continues to thrive.
If you would like to read more about Canadian marijuana stocks, check out our previous blog post, “Cannabis Investment: Which Weed Stocks are Worth Your Time.”
