2 Marijuana Stocks to Watch This Winter and Into 2019
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Investor interest in marijuana stocks is flying high, thanks largely to the recent strong performance of some of the group, the legalization of recreational marijuana in Canada on Oct. 17, and the sector's rosy projected growth dynamics.
It's early in the game, so it's best to keep an open mind about which of the many marijuana companies are likely to emerge as long-term winners. That said, two cannabis stocks that are worth putting on your watchlist are Canada-based grower Canopy Growth (NYSE: CGC) and cannabis industry-focused real estate investment trust (REIT) Innovative Industrial Properties (NYSE: IIPR).
Image source: Getty Images.
Overview
Before we dig in, here's a broad overview of the two marijuana companies and their stocks.
| Company | Country | Market Cap | Profitable? | Dividend | YTD 2018 / Nearly 2-Year Performance* |
|---|---|---|---|---|---|
| Canopy Growth | Canada | $11.0 billion | No | N/A | 39.5% / 286% |
| Innovative Industrial Properties | U.S. (San Diego) | $487 million | Yes | 2.7% | 57.9% / 173% |
| S&P 500 | -- | -- | -- | 1.9% | 4.2% / 30% |
Data sources: Yahoo! Finance and YCharts. Data to 11/29/18. *Since Innovative Industrial Properties' IPO in early Dec. 2016.
For context, the following chart shows how Canopy and Innovative Industrial Properties stocks have performed in 2018 relative to the four next largest (behind Canopy) marijuana stocks that have traded on a U.S. exchange since the beginning of the year. These are Aurora Cannabis (market cap $5.4 billion), GW Pharmaceuticals ($3.7 billion), Aphria ($1.8 billion), and Cronos ($1.6 billion). GW Pharmaceuticals is a U.K.-based biopharmaceutical company focused on cannabis-based medicines, while the other three are Canopy's Canadian peers.
Data by YCharts.
Canopy Growth: The cash and big partnership king
Canopy Growth's main operation is growing, processing, and selling medical and recreational cannabis in Canada, though it also has a growing medical marijuana operation in various other countries. It's worth watching for many reasons, with several top ones including that it's an early mover in the space, has a ton of cash, and has an enviable partnership with a Fortune 500 company.
Let's expound on these points. An important early-mover advantage the company, which was founded in 2013, enjoys is that its Tweed brand is reportedly the most recognized marijuana brand in the world. Moreover, Canopy is on track to be the first mover among marijuana companies to offer cannabis-infused beverages with a major player in the beverage market. The company is working on developing such drinks -- which are expected to get the green light in Canada next year -- with its strategic partner, Constellation Brands, maker of Corona and Modelo beers.