With the US Stock Market currently in flux, investors have taken their money and run—literally and figuratively. One of the major sectors to experience a massive earnings decline in 2018 was the tech industry. Cannabis stocks, on the other hand, managed to stay (relatively) unscathed.
Before Canada officially legalized recreational weed on October 17th, 2018, the price of Canadian weed stocks surged. However, many analysts believe that was the result of a bubble within the sector. After all, the industry is a bit oversaturated, with a seemingly endless amount of cannabis stocks making their way onto the market.
There are still some Canadian cannabis stocks, however, that can serve as a potential gold mine for investors. Having said that, like any stock, choosing the ones with the brightest futures is obviously imperative for making money. So, let’s take a look at the ones that could prove to be great buys going forward.
What Are The Best Performing Canadian Cannabis Stocks of 2018?
Tilray was actually one of the most overvalued cannabis stocks in 2018, with shares at one point soaring to over $300. It’s since seen a correction, and is currently trading at around $70. Again, this shouldn’t deter investors—it should do quite the opposite. Now that it has a realistic valuation, there’s no doubt Tilray should bounce back in a big way. This is especially true for once the market begins to recover. After coming just shy of meeting its lofty earning expectations in Q3 and recently striking a deal with Anheuser-Busch deal to the tune of $100 million, Tilray is expected to be a big player in Canada’s upcoming cannabis-infused beverage sector. All indications point to Tilray being a winning stock for cannabis investors going forward.
Canopy Growth was one of the first major Canadian cannabis companies to strike a deal with a big-name beverage company last year. Constellation Brands, which distributes the popular Mexican beer Corona, made a monumental $4 billion investment in Canopy Growth. As a result, Canopy Growth now has the highest cash stockpile amongst rival companies. It also contains the highest market cap of any Canadian marijuana stock. Canopy fell far short of its projected earnings in Q3, though. Nonetheless, that should have been anticipated. After all, the new industry is just beginning to garner its footing. The USA’s recent legalization of hemp also bodes well for Canopy, with CEO Bruce Lindt stating his company’s intention to pursue a “federally permissible path to the market.” The inevitable legalization of weed in the US can only help make Canopy that much more of an appealing company to invest in.
Aurora Cannabis is another stock to look out for during the 2019 fiscal year. For starters, it’s the only company with a higher production capacity than the aforementioned Canopy Growth. According to The Motley Fool, it is on pace to produce a mind-boggling 700,000 kilograms per year over the next few years. Overall, it is considered the second-biggest cannabis company, only behind Canopy. Right now, its share price is hovering only around $5. However, that’s because of an influx of outstanding shares due to the acquisition of smaller cannabis companies. These include CanvasRx, Pedanios Gmbh, and BC Northern Lights, to name a few. It also began trading on the NYSE back on October 23rd, which also bodes well for its future.
Cronos Group isn’t as highly regarded as the last several companies. For those looking to get in on a smaller company from the ground up, though, Cronos might be your best bet. Currently it has a pro forma production capacity of around 117,150 kilograms per year. Admittedly, that doesn’t quite stack up to companies like Canopy or Aurora in terms of sheer output. However, last year’s partnership with American tobacco company Altria made it one of the better positioned Canadian cannabis companies in the space. More recently, the company also struck a partnering deal with Ginkgo Bioworks. Consequently, Cronos is now a company on the rise and looking to differentiate itself within an oversaturated market of cannabis companies.