Marijuana stocks have seen record activity in the trailing 12 months, with no suggestion of slowing down. In Canada, the recreational market opened for business in October with Canopy Growth and Cronos Group securing multibillion-dollar investments from S&P 500 consumer goods companies, U.S. states with adult-use laws climbed to 10; and Congress finally passed the much anticipated hemp farming bill. Now in the initial stages of 2019, marijuana activity as while continues to soar and that could have you considering which marijuana stocks are best for your portfolio. A good place to start is to construct a list centered around who is a legitimate marijuana company that is expected to maintain its footing int he industry.
Its safe to assume the king of the Cannabis castle, Canopy Growth, will be ocypying to top spot in our list, leveraging its 30%-plus market share in Canada’s medical marijuana market, bringing in $4 billion investment from beer, wine, and spirits.
Constellation Brands ranks as the №1 premium beer company in the U.S., with best-selling brands Corona and Modelo. While the beer industry, in general, hasn’t grown all that much, Constellation has generated industry-leading growth thanks to its high-end and craft beers.
Aurora Cannabis has also taken advantage of its status as an early leader, using its shares to orchestrate multiple acquisitions that have catapulted sales and potential peak marijuana production capacity.
Scotts Miracle-Gro. Most of Scotts’ revenue still comes from its consumer lawn and garden products business. However, Scotts Miracle-Gro still qualifies as a U.S. marijuana stock because of its Hawthorne Gardening subsidiary.The story is similar at competing growers Aphria, Cronos Group, Tilray, and CannTrust, which arguably also make the cut as top-tier cannabis companies.
Who is expected to be added to the list of the top Cannabis Companies in last quarter of 2019?
#1 Profile Solutions Inc (PSIQ) Taking our number 1 slot two months in a row now, is Profile Solutions Inc., (PSIQ). PSIQ is the company behind Elite Hemp Products International, and the recent recipient of 2.5 million dollars for the exclusive license to establish a Cannabis growing operation in the African region of eSwatini.
Dan Oran, CEO of PSIQ stated, “To become the only licensed growing farm and processing plant for medical cannabis & hemp in The Kingdom of eSwatini, our mission has been to secure the required licenses, permits, land, resources and capital to commence operations. We believe Stem Ventures is the right partner to commence operations with. In addition to providing financing, we anticipate Stem Ventures being a value-added partner due to its investor base of financers, entrepreneurs and medical professionals as well as experience in all things Cannabis.”
There are now hundreds of companies with licences to operate within the marijuana sector in Canada. Naturally, since recreational uses of pot were legalized, sales have gone through the roof. Aphria is currently one of the leaders in terms of sales and revenues in the Canadian pot market, but its overall financial results have been less than impressive. The firm’s latest earnings were particularly disappointing.
Though revenues rose to $73.6 million (a 617% year-over-year increase), this was largely as a result of international acquisitions. Aphria’s organic sales totaled a relatively average $17 million. More importantly, though, Aphria’s recreational sales decreased by about 35% quarter over quarter (even though the previous quarter included just one month of recreational sales after they were legalized), and medical sales declined by about 2% from the previous quarter. In short, Aphria seems to be losing ground in its domestic market.
Further, Aphria has some of the lowest margins among the top Canadian cannabis sellers. The firm’s gross margin was around 18% during its latest reported quarter. Finally, Aphria incurred a major net loss due to a one-time impairment expense related to its infamous LATAM transactions. As you will recall, the firm was accused of paying too much for the acquisition of various assets in South America. This $58 million impairment charge was hopefully the final chapter of that saga.