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Cannabis stocks have been crashing over recent months. Investors have turned bearish on the industry as companies have continued to record significant losses even as sales have been soaring. There's no doubt the cannabis sector offers great potential, with a recent estimate projecting the Canadian and U.S. markets to be worth a combined $47.3 billion by 2024.
But finding safe opportunities to take advantage of that growth can be difficult for investors. The good news is that because other industries are getting involved in cannabis, you don't have to buy pure-play cannabis stocks to take advantage of those opportunities. Here are two more established companies with sustainable businesses that will be able to benefit from the growth in the industry as well.
1. Altria Group
Cigarette company Altria Group (NYSE: MO), which owns the popular Marlboro brand within the U.S., could be in a great position to take advantage of the industry's growth without that much risk. With revenues north of $19 billion in each of the past three years and no trouble turning a profit, Altria is a strong business that pays a high dividend yield of more than 7.6%. Although the stock has fallen 10% this year, it could still be a great buy all on its own.
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What makes Altria more attractive, however, is that the company has invested in cannabis producer Cronos Group (NASDAQ: CRON). Getting into cannabis gives the cigarette maker the potential to benefit from a lot of crossover between the two industries. Vaping, for instance, is popular among both cannabis and tobacco users, and with Altria holding a 35% stake in Juul Labs, it presents an attractive growth opportunity in both industries.
The opportunity could be even bigger if Altria ends up merging with Philip Morris (NYSE: PM), adding even more resources into the mix. But even without the merger, at the very least, Altria gives cannabis investors a way to benefit from a more financially stable stock that has great exposure to marijuana.
2. Scotts Miracle-Gro
Scotts Miracle-Gro (NYSE: SMG) is a good option for investors who don't want to invest in the tobacco industry. It has also been doing a lot better than Altria this year, with shares rising around 75% since January. The company has tapped into the cannabis market through its subsidiary, the Hawthorne Gardening Company.
Hawthorne helps meet the agricultural needs of cannabis growers, and as legalization continues to spread across the country and more companies set up operations, demand for hydroponic (growing plants without soil) supplies is going to soar. The company aims to be a one-stop shop for cannabis growers of all sizes.