The number of legal cannabis companies in America is growing by the day. It's no surprise. Everyone wants in on one of the fastest-growing industries in U.S. history.
The growth numbers are outrageous.
According to the National Institute for Cannabis Investors, legal marijuana sales totaled $10.8 billion in 2018. In the next nine years, it's estimated the market could hit a whopping $2.6 trillion in annual sales.
That's industry growth of 23,974% in just over 10 years.
But investing in marijuana stocks requires extensive research. Many of the "companies" popping up are not the type of firms you want to invest in. They're just trying to cash in on the hype.
We have you covered. Today, we'll show you how to invest in marijuana successfully by picking out companies with strong fundamentals. Of course, marijuana investing is more speculative than income investing or passive investing. But the potential returns are astonishing.
Just look at CV Sciences Inc. (OTCMKTS: CVSI). It soared over 1,500% in just five months in 2018.
The marijuana companies we'll show you today are the perfect balance of solid fundamentals and huge profit potential.
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These are also companies that are directly involved with cannabis. These aren't massive biotechs looking to diversify their billion-dollar portfolios with a cheap cannabis drug. They're firms directly involved in the industry. That gives them much higher upside.
These are the three top legal marijuana companies to invest in now...
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Canopy Growth Corp. (NYSE: CGC) is one of the biggest names in legal marijuana. With over 3,000 employees, Canopy is one of the largest producers and distributors of cannabis in Canada.
It also may be the most diversified marijuana company on the market.
The company's products include dried flower, concentrates, oils, soft gel capsules, and various hemp products. These products appeal to both recreational and medical cannabis users.
But that's not the extent of Canopy's medical program.
Through its healthcare division, the company focuses on cannabis-based medicines as well. Canopy has a clinical research partnership with NEEKA Health Canada. Together, the two research the effectiveness of cannabinoids for treating athletes with concussions.
The firm also purchased a stake in Biosteel Sports Nutrition Inc. in 2019. Now, Canopy is creating CBD-infused drinks for athletes.
Another major selling point for CGC is its partnership with Constellation Brands Inc. (NYSE: STZ). In 2018, Constellation bought a 38% stake in Canopy. As one of the largest alcoholic beverage makers in the world, Constellation plans to help Canopy expand into the cannabis-infused beverage market.
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Of course, you can't mention CGC stock without discussing its poor performance in the last year. Since peaking in September 2019, Canopy stock has fallen more than 54%.
But as is the case with all marijuana stocks, CGC is a long-term investment. This is not a stock you hold for two to three months and hope to make a quick profit. This is a stock to buy and hold for years if you believe in the long-term potential of the cannabis market.
Shares trade near $22 today.
Tilray Inc. (NASDAQ: TLRY) is another big name in the cannabis industry. Unfortunately, this is another stock that's gotten hammered over the last two years, dropping 88% since its peak in 2018.
While some may avoid the stock because of that dip, we see an opportunity. The fact is you can get another long-term player in this enormous industry for pennies on the dollar.
Headquartered in Canada, Tilray operates in 12 countries around the world. Its name might also be familiar because it was the first cannabis company to hold its IPO on a major U.S. stock exchange.
That's a big part of the reason for the stock's run-up and eventual pullback. After the IPO, TLRY shares exploded 400% in less than three months. Of course, that was purely hype-driven and completely unsustainable.
Like Canopy, Tilray has numerous partnerships in multiple fields. It has a joint venture with ABInBev to create cannabis beverages. It acquired the hemp food manufacturer Manitoba Harvest in 2019, allowing it to break into the food business. It also acquired a 155,000-square-foot greenhouse in Ontario last year to boost its production.
A look at revenue growth is another extremely bullish sign. In 2020, TLRY is expected to grow revenue 75% to over $300 million. Like many other cannabis companies, TLRY is not yet profitable, but it's making progress. Earnings in 2020 should come in at -$1.02. That's an improvement from -$1.41 the previous year.
You can buy TLRY shares near $17 today.
Acreage Holdings Inc. (OTCMTKS: ACRGF) is our top stock today and also the smallest of the three companies. Shares trade for just $5.25 today. That makes this stock more speculative that Tilray or Canopy, but it also has the highest upside of the three.
Acreage was founded in 2014 and is based in New York. Today, it operates in 20 states.
But it's a partnership with Canopy Growth that really put Acreage on the map.
In April 2019, the two companies announced a deal where Canopy will acquire Acreage when the United States legalizes the growth, sale, and production of cannabis. Of course, cannabis is legal in the states where ACRGF operates now, but the deal depends on federal legalization.
The deal was valued at $3.4 billion. That's significant because ACRGF has a market cap of just over $350 million today.
Instead of building its own brand in the United States, Canopy will rely on Acreage. It's hard to imagine a bigger bullish signal than that for ACRGF.
Acreage stock is down 79% since it peaked in 2018. Now it trades near penny stock territory. There's no doubt that this is a speculative investment. But it's also the kind of cannabis stock that can bring triple- or even quadruple-digit gains as the legalization movement continues.
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