Marijuana Stocks may Rebound
Despite legal obstacles in the U.S., the cannabis sector is prospering. BDSA, a source of retail sales statistics for the industry, forecasts that worldwide cannabis sales will top $35 billion in 2022, an increase of 22% over 2021. The future for marijuana equities in the U.S. is less optimistic. The District of Columbia, three territories, and 37 states have so far legalized the use of cannabis products for medicinal purposes. Recreational usage is allowed in 19 states, Washington, D.C., and two territories.
Cannabis products continue to fall under the Controlled Substances Act’s Schedule I category, making it illegal for users to possess or use them by federal law, despite two recent efforts by the U.S. House of Representatives to enact legislation legalizing it on a national level. Rules may change, and many experts think there is still a lot of space for development in the marijuana market.
The top 10 marijuana stocks to purchase in 2022 are listed below if you wish to invest in this emerging sector.
1. Cresco Labs Inc. (ticker: CRLBF)
A multistate operator, or MSO, with headquarters in the United States, Cresco Labs is one of the top wholesalers of branded cannabis products. By 2022, it will also have 50 retail locations, and more than 1,100 dispensaries will sell its goods. It recorded $214 million in sales for the first quarter of this year, a 20% rise over the same period last year. Over-the-counter, or OTC, trading has significantly reduced the value of Cresco Labs’ shares thus far in 2022.
However, one of the biggest MSOs in the medicinal marijuana sector, Columbia Care Inc. (CCHWF), was acquired by Cresco for $2 billion. This may put Cresco Labs in a strong position as the marijuana market expands.
2. Cronos Group Inc.(CRON)
In February 2018, the Toronto-based Cronos Group became the first cannabis stock to trade on the Nasdaq. Under four brands, it offers marijuana products for both medical and recreational use. In certain nations, it offers dried cannabis, vaporizers, and edibles. Still, in the United States, it only provides hemp-derived products.
Since last August, the price of Cronos’ shares has fallen significantly—by more than 50%. However, Cronos has put itself in a good position for growth in the United States, and in 2021 it said that it had bought an option to buy a 10.5% ownership part in PharmaCann. It could take this option and use PharmaCann to market its goods, depending on developments with the federal cannabis regulations in the United States.
3. Organization Gram Holdings Inc. (OGI)
The leading legal distributor of both medicinal and recreational marijuana in Canada is OrganiGram Holdings. It serves the Israeli and Australian medical markets in addition to the ten Canadian provinces and the territory of Yukon via its extensive sales and distribution network. OrganiGram Holdings’ net revenue for the third quarter of its fiscal year 2022 was 38.1 million Canadian dollars ($29.5 million), up 88% over the previous quarter.
OGI has underperformed compared to other marijuana companies this year; as of August 12, it is down more than 30%. OrganiGram has made considerable investments in its infrastructure, automation, and procedures to be more cost-effective as it expands.
Additionally, it has added intriguing new goods to its line-up. OrganiGram may be a wise pick for marijuana investors with CA$127 million ($98.5 million) in cash and short-term assets and a low level of debt.
Also read : How Will Marijuana Stocks Do In A Bear Market?
4. TerrAscend Corporation (TRSSF)
TerrAscend, a top cannabis grower in North America, operates there and in Maryland, Pennsylvania, New Jersey, California, and New Jersey. Its gross profit margin increased to 35.5% in the second quarter of 2022 from 30.4% in the first quarter.
TerrAscend increased the size of its facilities in 2022 and was granted a New Jersey license for medical patient home delivery. According to Jason Wild, executive chairman of TerrAscend, “New Jersey adult-use sales got off to a strong start,” revenue increased 31% sequentially for the second quarter.
To expand its reach, the business recently disclosed deals to buy operators of dispensaries in Michigan and Maryland. TerrAscend may be a leader in that space for investors who believe marijuana will have a comeback, despite the stock’s decline year to date.
5. Trulieve Cannabis Corporation (TCNNF)
MSO Trulieve Cannabis Corp. primarily operates in Arizona, Florida, Pennsylvania, and 11 other states. It was the first medical marijuana business in Florida to get a license. As of May 2022, it employed more than 9,000 people and operated more than 165 retail shops.
Trulieve reported sales of $320.3 million in the second quarter, a rise of 49% year over year, even though its share price on the OTC market was down almost 50% this year as of August 12. Suppose Florida legalizes recreational marijuana in the following years.
In that case, Trulieve will be in a good position thanks to its $2 billion purchase of Harvest Health & Recreation Inc. in 2021. TCNNF closed at $13.15 on August 12 and has a 12-month price target of $54 set by stock research analyst company Cantor Fitzgerald, indicating a possible gain of nearly 310%.
6. Verano Holdings Corporation (VERNON)
Verano is an MSO with headquarters in Chicago that creates various cannabis products, including edibles, vape cartridges, and lotions and balms for pain management. Since the year’s beginning, Verano has underperformed in the OTC market, falling nearly 55%.
Although it will launch its 55th site in Florida in August, one of the largest marijuana markets in the nation, it is growing operations there. With more than 100 dispensaries and 13 cultivation and processing facilities, its operational activities cover 13 states.
Given that Verano Holdings is one of the top five MSOs in the United States in terms of revenue, investors may benefit from a change in the law.
7. Village Farms International, Inc. (VFF)
One of North America’s biggest producers of controlled environment agriculture (CEA) is Village Farms International. Village Farms, founded in 1989, entered the Canadian recreational cannabis market in 2017 and began to gain traction in the United States in 2018.
Village Farms continues to run its product segment, generating more than 50% of its revenues and producing veggies in Canada, Texas, and Mexico. Investors may find its varied business portfolio intriguing.
In addition, while a significant amount of Village Farms’ revenue comes from vegetables, its cannabis business is expanding. Sales of cannabis in the United States and Canada totaled $28.8 million in the first quarter of 2022, up from only $17.4 million in the same time the year before. In a challenging economic situation, its adjusted EBITDA, also known as profits before interest, taxes, depreciation, and amortization, climbed modestly yearly.
Also read: Five Marijuana Stocks to Buy in 2022
8. Scotts Miracle-Gro (SMG, $101.35)
In late March, Scotts Miracle-Gro (SMG, $101.35) made a significant impact in the medical marijuana industry when affiliates of the business bought Etain Health, one of the first medical marijuana growers in New York State.
The $247 million cash-and-stock deal allows the Ohio-based manufacturer of lawn care and gardening goods greater direct engagement in the cannabis sector, with the state’s legalization of recreational sales anticipated later in 2022 or early in 2023.
Additionally, Mark Sims, a firm expert in mergers and acquisitions, will succeed the company’s founders as CEO of Etain.
Before Scotts bought in Etain, Joseph Altobello, a Raymond James analyst, reduced his price estimate on SMG from $185 to $150. Scotts revised its growth projections for its Hawthorne hydroponics division for 2022, which caused Altobello to lower the target price by $35.
It now anticipates a 25% decrease in Hawthorne’s revenues this year.
Scotts is currently rated a Strong Buy by Altobello, who thinks shares still have a 48% potential over the next 12 months.
The company’s Hawthorne hydroponics business is well-positioned for long-term growth despite near-term headwinds, Altobello said in March. “Our Strong Buy rating on the shares of Scotts Miracle-Gro reflects our view that the gains made by its U.S. Consumer segment during the COVID-19 pandemic should prove largely sustainable,” he added.
Additionally, the price is still quite appealing since it seems like investors are virtually receiving Hawthorne for nothing. Since SMG shares were dragged down by the market and lost another 20% of their value, that pricing has undoubtedly become even more alluring.
9. Altria (MO, $41.81)
Over the last several years, Marlboro’s parent company Altria (MO, $41.81), has not had a great run. Compared to the positive 11.1% total return for the overall U.S. market, the stock has produced a five-year annualized total return (stock price plus dividends) of minus 5.0%. But compared to the -13.2% for the whole U.S. market, its annualized total return over the last 52 weeks is -4.1%.
It didn’t help that on June 23, the Food and Drug Administration banned all Juul Labs’ vape products from U.S. markets. But before the announcement, a significant chunk of the stock’s decline was already included in its shares.
In 2018, Altria paid $12.8 billion to acquire 35% of Juul Labs.
When it invested, it was aware that it was taking a risk. Since then, it has repeatedly written down the value of its stake. Altria put a $1.7 billion deal on its 35% ownership by the end of 2021. The business is anticipated to challenge the FDA’s ruling.
Analysts were surprised by the Juul ban, but Altria’s company shouldn’t suffer much in the long run from it. Pre-tax losses of at least 90 cents per share are projected to be incurred to write down the remaining investment.
10. Curaleaf Holdings ($6.09, CURLF)
Curaleaf Holdings (CURLF, $6.09), situated in Massachusetts, could be the best option if you’re searching for a pure-play cannabis firm in the United States. The business was founded in New Jersey in 2010 and created one of the first vaporizers to disperse a single calculated dosage of medicinal marijuana.
As previously noted, in late April, consumers 21 and older were able to purchase cannabis for adult use in New Jersey. From its Bellmawr facility, Curaleaf started selling marijuana for recreational use to open its other two New Jersey dispensaries soon.
CURLF is active in 23 states, including Massachusetts, New Jersey, Arizona, and Florida. It owns and runs 26 growing locations in addition to 128 dispensaries. And Curaleaf is growing into one of the top cannabis businesses in the world by using science to improve the consumer experience.
Thirty-seven states, Washington, D.C., and four territories have all authorized medicinal marijuana. Cannabis for adult use is now legal in 18 states, the District of Columbia, and Guam. Curaleaf should be able to continue growing its company organically and via acquisitions as additional states allow adult usage.