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How to Find the Best Cannabis Stocks to Buy

The legal cannabis market is a fast-growing industry, expected to exceed $145 billion by 2025, with two-thirds of that total in the medical-use segment. To give some idea of the magnitude of the industry’s growth, the global cannabis market was estimated at $11 billion in 2017.

Any industry showing that sort of growth is bound to attract investors. Except…

Except that you want to learn more about the companies before putting up your money.

TipRanks has the online Stock Comparison Tool you need. You’re looking for cannabis stocks – no problem. You can put them side-by-side in the Stock Comparer, with their vital stats and all. Like this:

Cannabis Stocks in the Comparison Tool

Right away, you can see that the Stock Comparer offers more than just a comparison of cannabis stocks. With eight built-in topics, and a search engine to comb TipRanks’ database, the comparer can show you any company you want to see. In our example, we’re looking at the four largest cannabis companies, by market cap.

Asking the Right Questions

Stock data is presented in a clear, easy to read chart. Is GW Pharma too expensive for you? No problem – Aurora Cannabis is available, for only $11 Canadian on the Toronto Stock Exchange.

Do you want to buy in to the largest cannabis company? That would be Canopy Growth, with a market cap of almost $20 billion, also in Canadian currency.

Are you worried that cannabis is just a fad? Well, all four of these stocks are showing significant growth over the past year, ranging from 32% to 136%.

Wondering which stock will show the strongest growth going forward? Here you have to rely on the analysts – the right-hand columns show you how the analysts rate each stock, and the average price target. And that percentage under the price target? That’s the upside – the room for growth between the current share price and average price target. Among these stocks, Tilray shows the highest upside, with a 55% potential.

But what about that Hold? That’s the Analyst Consensus, a composite rating derived from all of the analyst opinions on a particular stock. Wall Street’s analysts are worried about Tilray, and are not recommending it as a buy – but the high upside makes it a classic example of risk and reward in the market.

Making Sense of the Answers

Now that you have the information from the stock comparer, it’s time to decide which cannabis company to go with. If you’re looking for a safe play, GW Pharma is probably the way to go. It’s a traditional pharmaceutical company, on this list because its founders had the foresight to start working with cannabis derivatives and extracts back in 1998. The risk play is Tilray, a cannabis growing company based in Canada and positioning itself as a supplier for the medical market.

So, let’s look closer at the three buy-rated stocks.

Aurora Cannabis (TSE:ACBResearch Report)

Based in Edmonton, in the Canadian province of Alberta, and capable of producing up to 500,000 kilograms of cannabis products annually, Aurora is a major supplier to the legal marijuana industry.

It’s also positioning itself for success in the international cannabis markets. On April 4, Jefferies analyst Owen Bennett (Track Record & Ratings) recently noted ACB’s acquisition of cultivation rights in Germany: “German press reporting today preliminary results of the German domestic cultivation tender process, with Aurora apparently receiving 5 of the 13 lots… if true this decision adds to the credibility of Aurora’s medical operations and positions it well for entrance to future international markets.”

More recently, Cowen’s five-star analyst Vivien Azer (Track Record & Ratings) pointed out that, while the cannabis industry generally is dealing with issues of tight supply and modest growth, Aurora is one of the companies likely to outperform and merit a ‘buy’ rating.

Overall, ACB keeps a ‘Strong Buy’ consensus rating, based on 3 buys and 1 hold given over the past three months. Shares sell for $11.83 Canadian; with an average price target of C$12.83, this gives ACB an upside potential of 8%.

View TSE:ACB Price Target & Analyst Ratings Detail

Canopy Growth Corporation (TSE:WEEDResearch Report)

As mentioned above, Canopy is the largest of the Canadian cannabis producers, with a market cap of nearly $20 billion Canadian dollars. Canopy’s size and nationwide production and distribution network attracted the attention of Constellation Brands (STZ), the US’ third largest beer importer. The two companies completed an agreement in November 2018, whereby Constellation bought a 38% stake in Canopy for $3.8 billion in US currency, with plans to create cannabis infused beverages.

Canopy, like Aurora, recently received a ‘buy’ rating from Vivien Azer, which comes just two months after Canaccord’s Matt Bottomley (Track Record & Ratings) gave WEED a buy rating with a C$70 price target. Bottomley’s target suggest room for a 24% upside.

Making the bearish case on Canopy is Seaport Global’s Brett Hundley (Track Record & Ratings). Hundely says, “It is prudent to be somewhat conservative related to store rollouts this spring along with the development of the nationwide edibles/beverages market later this year.”

Canopy’s analyst consensus is a ‘Moderate Buy,’ based on 3 buy ratings and 4 holds. The stock shows plenty of reward potential, however, with a 20% upside and a C$67 average price target compared to the C$56 price target.

View TSE:WEED Price Target & Analyst Ratings Detail

GW Pharmaceuticals (GWPHResearch Report)

Founded in 1998, GW was an early adopter when it comes to medical cannabis. The company has a cannabidiol-derived drug on the market, Sativex, which is approved in the UK and Canada for treatment of multiple sclerosis.

In recent years, GW Pharma has been conducting research into use of cannabidiol-based drugs as a treatment for resistant childhood epilepsy. The company may have gotten a boost recently, when its competitor Zogenix (ZGNX) hit a bureaucratic setback with the FDA.

That last point got the attention of Morgan Stanley analyst David Lebovitz (Track Record & Ratings). He said, “Expect shares of GW Pharmaceuticals (GWPH) to be up at least 5-10% following news that Zogenix (ZGNX) was issued a Refusal to File letter for Fintepla by the FDA. The RTF delays a potential competing product for the treatment of seizures associated with Dravet Syndrome.”

It’s a cutthroat world, and sometimes one company’s setback may be another’s opportunity.

With two recent buy ratings under its belt, GW Pharma maintains a ‘Moderate Buy’ on the analyst consensus. The stock’s $167 share price and $183 average price target yield a 9% upside potential.

View GWPH Price Target & Analyst Ratings Detail

Enjoy the Research Reports on the Stocks in this Article:

Aurora Cannabis (TSE:ACB) Research Report

Canopy Growth Corporation (TSE:WEED) Research Report

GW Pharmaceuticals (GWPH) Research Report

All of this is just a sample of TipRanks’ Stock Comparer. The comparison tool offers you the flexibility to line up your investment opportunities side by side, and compare apples to apples. You can find the Stock Comparison tool on our website, under the ‘Research Tools’ dropdown menu at the top right of the homepage. Start comparing your favorite stocks today!

Michael Marcus
Michael has been writing online content for nearly 15 years. Starting out in the SEO field, Michael has shifted in recent years to the financial sector, using his academic background in political science to draw connections between current events and the financial markets.

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