CL.CX, SNDL, and CRON are top for value, growth, and performance
The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution, and sale of medical and recreational marijuana. Cannabis has begun to gain wider acceptance and has been legalized in a growing number of nations, states, and other jurisdictions for recreational, medicinal, and other uses. Some of the biggest companies in the marijuana industry include Canopy Growth Corp., Cronos Group Inc., and Tilray Inc. Many big marijuana companies have continued to post sizable net losses as they focus on investments needed to speed up revenue growth. 37 U.S. states now permit the use of marijuana in some form.
Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have vastly underperformed the broader market. MJ has provided a total return of -66.3% over the past 12 months, well below the Russell 1000 Index’s total return of -15.2%. These market performance numbers and all statistics in the tables below are as of Sept. 22, 2022.
Here are the top five marijuana stocks with the best value, the fastest growth, and the best performance.
Best Value Marijuana Stocks
These are the marijuana stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in the early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves (or returns to) profitability. The P/S ratio shows how much you’re paying for the stock for each dollar of sales generated.
|Best Value Marijuana Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/S Ratio|
|Cresco Labs Inc. (CL.CX)||CA$4.08||CA$1.2||1.1|
|Aurora Cannabis Inc. (ACB)||1.22||0.4||1.5|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$13.35||CA$2.5||1.6|
|TerrAscend Corp. (TER.CX)||CA$2.02||CA$0.5||1.6|
|Verano Holdings Corp. (VRNO.CX)||CA$6.85||CA$2.2||2.1|
- Cresco Labs Inc.: Cresco Labs is a cannabis products company involved in growing, manufacturing, and distribution. The company operates in 10 states, including more than 70 total production facilities and dispensaries. Its brands include Cresco, Remedi, High Supply, Wonder Wellness Co., Mindy’s, Good News, Sunnyside, and FloraCal Farms. Cresco Labs’ stock also trades OTC in the U.S. under the ticker CRLBF. On July 15, Cresco reported that Columbia Care Inc., a cultivator and maker of cannabis products, had obtained the final order from the Supreme Court of British Columbia approving its business combination with Cresco Labs. Cresco will acquire all outstanding shares of Columbia Care. The combination is expected to close in Q4 2022. At the time of the announcement, it was estimated that Cresco Labs is paying $2 billion for Columbia Care.
- Aurora Cannabis Inc.: Aurora Cannabis is a Canada-based company specializing in the production, distribution, and sale of medical cannabis products. Its brands include Aurora, Aurora Drift, Daily Special, MedReleaf, Whistler, and more. The company’s growth strategy targets medical cannabis markets across the globe as well as the U.S. hemp-derived CBD market and the Canadian recreational market. Aurora’s reported year-end and fiscal Q4 results on Sept. 20 for the period ending June 30. Net losses widened sharply year-over-year (YOY) as a result of a non-cash impairment charge of over $505 million. Net revenue declined modestly YOY. The company announced that FY 2023 would be comprised of only three reporting periods, instead of the traditional four. The new fiscal year end will be March 31, 2023.
- Trulieve Cannabis Corp.: Trulieve is a vertically integrated cannabis company with operations in 11 states. The company’s brands include Cultivar Collection, Muse, Sweet Talk, and Momenta. Trulieve shares trade OTC under the ticker TCNNF. On Sept. 21, Trulieve announced that the Georgia Access to Medical Cannabis Commission had awarded the company a Class 1 production license. The company will have an initial allocation of five medical cannabis dispensaries throughout the state.
- TerrAscend Corp.: TerrAscend is a Canada-based vertically integrated cannabis company with operations in Canada and the U.S. The company’s brands and business lines include Gage Cannabis, The Apothecarium, Ilera Healthcare, Kind Tree, Prism, State Flower, and Valhalla Confections. TerrAscend also trades OTC in U.S. markets under the ticker TRSSF. On Aug. 24, TerrAscend announced that it had completed the acquisition of KISA Enterprises MI LLC, known as Pinnacle, for $28.5 million. Pinnacle is a dispensary chain operator in Michigan. The acquisition includes six dispensary licenses.
- Verano Holdings Corp.: Verano Holdings is a vertically integrated, multi-state cannabis operator. The company produces a wide range of medical and adult-use cannabis products. It owns and operates 13 cultivation and manufacturing facilities and owns over 100 dispensaries in a number of states throughout the U.S. The company’s stock also trades OTC in the U.S. under the ticker VRNOF. On Sept. 7, Verano announced that it had completed the acquisition of WSCC Inc., known as Sierra Well. The acquisition includes two operational dispensaries and a cultivation and production facility in Nevada, as well as two additional real estate properties in the state. Sierra Well has become a wholly-owned subsidiary of Verano. The price of the transaction was $29 million.
Fastest Growing Marijuana Stocks
These are the marijuana stocks with the highest YOY sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue organically or through other means and find growing companies that have not yet reached profitability. In addition, accounting factors that may not reflect the overall strength of the business can significantly influence earnings per share (EPS). However, sales growth can also be potentially misleading about the strength of a business because growing sales for money-losing businesses can be harmful if the companies have no plan to reach profitability.
|Fastest Growing Marijuana Stocks|
|Price ($)||Market Cap ($B)||Revenue Growth (%)|
|SNDL Inc. (SNDL)||2.32||0.6||2,250|
|Trulieve Cannabis Corp. (TRUL.CX)||CA$13.35||CA$2.5||54.6|
|Cronos Group Inc. (CRON)||2.86||1.1||47.6|
|Innovative Industrial Properties Inc. (IIPR)||94.20||2.6||44.3|
|Green Thumb Industries Inc. (GTII.CX)||CA$14.25||CA$3.4||19.0|
- SNDL Inc.: SNDL is a Canada-based cannabis producer. The company operates cultivation and processing facilities, retail stores, and also sells alcoholic beverages. Its cannabis brands include Sundial, Top Leaf, Palmetto, and Grasslands. At its annual and special shareholder meeting in late July, the company officially changed its name from Sundial Growers Inc. to SNDL Inc. It also implemented a share consolidation under which 10 pre-consolidation common shares were consolidated into one post-consolidation common share, effective July 25.
- Trulieve Cannabis Corp.: See above for company description.
- Cronos Group Inc.: Cronos Group is a Canada-based cannabis company. Its brand portfolio includes Spinach, Happy Dance, and PEACE+.
- Innovative Industrial Properties Inc.: Innovative Industrial Properties is a real estate investment trust (REIT) that engages in the acquisition, disposition, development, and
management of industrial facilities leased to tenants in the regulated medical
cannabis industry. The company’s portfolio consists of specialized industrial and greenhouse buildings leased to state-licensed, medical-use cannabis cultivators across the U.S. The company reported Q2 2022 earnings results on Aug. 3. Net income climbed by 37.1% on rising revenue growth YOY. Growth was driven by the acquisition and leasing of new properties, contractual rental escalations, and other factors.
- Green Thumb Industries Inc.: Green Thumb Industries is a cannabis retailer and consumer packaged products company. It markets products under brand names including Beboe, Dogwalkers, Doctor Solomon’s, Good Green, incredibles, and RYTHM. It has 77 open retail locations across 15 U.S. markets. Green Thumb stock also trades OTC under the ticker GTBIF.
Marijuana Stocks With the Best Performance
These are the marijuana stocks that had the smallest declines in total return over the past 12 months out of the companies we looked at.
|Marijuana Stocks With the Best Performance|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Cronos Group Inc. (CRON)||2.86||1.1||-51.5|
|Verano Holdings Corp. (VRNO.CX)||CA$6.85||CA$2.2||-54.2|
|Green Thumb Industries Inc. (GTII.CX)||CA$14.25||CA$3.4||-59.0|
|4Front Ventures Corp. (FFNT.CX)||CA$0.51||CA$0.3||-59.2|
|Innovative Industrial Properties Inc. (IIPR)||94.20||2.6||-59.2|
|ETFMG Alternative Harvest ETF (MJ)||N/A||N/A||-66.3|
- Cronos Group Inc.: See above for company description.
- Verano Holdings Corp.: See above for company description.
- Green Thumb Industries Inc.: See above for company description.
- 4Front Ventures Corp.: 4Front Ventures is a cannabis operator and retailer. It owns, operates, or manages cultivation and manufacturing properties in five states and employs over 600. Its stores attracted more than 1 million unique customers in 2021. 4Front also trades OTC under the symbol FFNTF. The company reported Q2 2022 earnings results on Aug. 15. The company’s net loss widened marginally YOY even as revenue rose. 4Front ‘s revenue saw growth in both revenue from sale of goods and real estate income.
- Innovative Industrial Properties Inc: See above for company description.
Trends to Watch in Marijuana Stocks
Marijuana stocks have given investors a wild ride over the past few years, staging eye-watering rallies and substantial declines. Those who invest in this emerging sector should monitor these key trends as they will likely guide price direction in months and years ahead.
Financing: Most U.S. financial institutions avoid offering to fund cannabis companies as marijuana is still federally illegal, meaning lenders that provide loans could face possible prosecution. However, the Secure and Fair Enforcement Banking Act (SAFE)—which passed through the House in 2021—aims to address this by preventing the federal government from penalizing banks that offer financial services to the cannabis industry. Although the legislation has failed to gain support in the Senate, investors should monitor any amendments to the bill that could increase the chances of it gaining congressional approval.
Increasing Merger and Acquisition Activity: As of last year’s fourth quarter, $8.5 billion worth of merger and acquisition (M&A) transactions had closed in the sector, significantly higher than the $3 billion worth of deals in 2020 and $3.6 billion in 2019. Increasing dealmaking in the cannabis space indicates that institutional investors have growing confidence in the industry’s future.
Potential U.S. Legalization: While several cannabis legalization bills grace the halls of Congress, bipartisan support remains difficult to achieve, creating a large amount of uncertainty for industry participants. However, several leading Canadian operators, such as Cronos and Tilray, are banking on the U.S. cannabis market, with both companies entering into acquisition deals subject to its decriminalization south of the border.
Advantages of Marijuana Stocks
Despite the underwhelming performance of marijuana stocks over the past year amid an uncertain regulatory environment, the sector offers risk-taking investors significant growth potential. According to industry analysis firm MJBizDaily, U.S. cannabis sales will surpass $33 billion in 2022 before reaching $52 billion by the end of 2026. Moreover, the global cannabis market is expected to reach nearly $200 billion by 2028, up from $28 billion in 2021.
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