Cannabis Stocks to Watch
Long-Term Investments That Show Promise in the Midst of Recent Industry Meltdown
By Alfonzo Porter
The legal cannabis industry has surged to almost $12 billion in revenue as of the end of fiscal year 2019. African American investors who are looking to capitalize on this financial windfall are advised to keep their ears close to the ground as the industry continues to develop.
As with any new enterprise entering the marketplace, there are ups and downs—and for a substance still listed nationally as a Schedule 1 drug, the industry has experienced more than its share of challenges.
For example, countless regulatory hoops, limitations on capital, a robust illegal marijuana market, and high taxes, ineffective internal and external controls, along with largely inexperienced management teams have caused this thriving industry to stumble throughout most of last year.
However, as the industry looks to find its balance, many firms have launched aggressive initiatives to institute tighter cost controls, establish better management structures, improve products and present a better financial picture, the market is slowly re-emerging as a professionally managed global industry.
For the wise investor, the long-term outlook appears to be bright. Here are a few publicly traded cannabis stocks to watch as we move into the 2020s.
Canopy Growth (NYSE:CGC) is among the largest firms based on market capitalization. It is well financed with good production capabilities. It is a global player with effective consumer packaging operations. It’s ability to continue to lead the market and fatten up its product lines bolds well for those looking to invest over the long-term.
OrganiGram Holdings (NASDAQ: OGI) is another solid long-term bet. While it occupies a somewhat middle of the pack position, it tends to perform well when compared to its larger competitors. Its cost controls belies high potential for profitability; and appears to be sustainable. It has an admirable growing operation and its cash position seems to be among the best in the industry. As a smaller player, it is not overly leveraged allowing it the space and time to grow as the industry matures.
Aphria (NYSE: APHA) is perhaps the most attractive cannabis stock today. It has solid valuation and enjoys a muscular international reputation. Its production capacity is second to none and product quality is among the industry’s best. Its cash position is strong. However, bad decisions by past management have resulted in a 21% drop in share price thus far in the 1st quarter 2020. Yet, it is poised to make a come-back. It has a terrific outlook for the long-term and is a strong competitor.
Cresco Labs (OTC: CRLBF) is a solid U.S. player. Its multi-state presence and smart acquisitions has placed it in an enviable position. The company is poised to become a billion dollar player by 2022. It is financially healthy with a current market cap of $1.1 billion. The company has a firm footprint in the California market but with the state’s heavy taxes and licensing processes, it continues to be challenged by the illegal marijuana market—which makes the stock a bit risky at present. It is well positioned, however, if national legalization is passed in the future.
As a community that has been negatively impacted by marijuana laws of the past, African Americans are now in a position to take advantage of the legal weed market in creative ways. Past arrests and convictions are of no consequence in seeking to make smart investments moving forward.