3 Top-Rated Cannabis Stocks That Analysts Are Loving Now

Gabriel Osorio-Mazzilli

Tue, Nov 28, 2023, 7:09 PM 4 min read

Hydrofarm Holdings Group, Inc. (HYFM)

Man works in a greenhouse hydrofarm nursery. HYFM stock.

Source: tong patong / Shutterstock

Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) is a major player in the world of controlled environment agriculture, specializing in hydroponic equipment and supplies.

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The latest Q3 2023 financial report showed a drop in net sales. But a silver lining shows improvement in adjusted gross profit and adjusted EBITDA. Clearly, this indicates a positive trend.

Despite challenges of inventory charges, Hydrofarm Holdings Group, Inc. managed to generate $7.7 million from operations and reported free cash flow of $6.9 million. Also, Hydrofarm is restructuring its U.S. manufacturing facilities to improve efficiency and save costs.

In a strategic move, it has joined forces with CEA Advisors, a global vertical farming consultancy, to expand its presence in the controlled environment agriculture space. And, its business division, Innovative Growers Equipment (IGE), will play a crucial role in the manufacturing and marketing of Growtainers and Growracks in North America.

Recently, HYFM acquired Greenstar Plant Products, Inc., a Canadian nutrient company famous for the Grotek and Gaia Green brands. Hence, this $83 million move adds more firepower to Hydrofarm’s range of high-performance products.

Village Farms International, Inc. (VFF)

Hydroponics,Organic fresh harvested vegetables

Source: bluedog studio / Shutterstock.com

British Columbia-based Village Farms International, Inc. (NASDAQ:VFF) is making waves in the cannabis industry. This company operates in a variety of segments, including Canadian and U.S. cannabis, as well as focusing on fresh produce.

Recently, its financials are showing a positive trend. Impressively, it narrowly consolidated net loss per share and adjusted EBITDA, resulting in healthy cash flow of $8.8 million. Notably, both the Canadian and U.S. cannabis divisions contributed positively to the bottom line. Further, the Canadian sector secured the second largest domestic market share in October.

Beyond the numbers, VFF is proving itself as an example of commitment to the community. For example, its Village Farms Fresh Produce subsidiary partnered with Military Makeover hosted by Montel Williams. They renovated the home of a deserving U.S. Army veteran, Carlos Colón-Ruiz, in Arlington, Texas. Colón-Ruiz, a Purple Heart recipient, received the support he deserved for his sacrifices during his deployment to Afghanistan.

On the innovation front, Pure Sunfarms Corp, a wholly-owned subsidiary, launched an exciting line of Pure Sunfarms High-THC 1g products. After a year of painstaking research and consumer feedback, the revamped offerings feature new hardware and flavors such as Pink Lemonade and Juicy Blueberry. Thus, they are experiencing a whopping 50% increase in demand since launch.

Aurora Cannabis (ACB)

Closeup of mobile phone screen with logo lettering of cannabinoid company Aurora Cannabis (ACB, blurred marijuana leaf (focus on left part of letter R in center)

Source: Ralf Liebhold / Shutterstock.com

Highly regarded by analysts, Aurora Cannabis Inc (NASDAQ:ACB) is a leading Canadian company expanding access to cannabis on a global scale.

In fact, its recent financial achievements include a record positive adjusted EBITDA of $3.4 million. Also, ACB boasts a 30% year-over-year (YOY) increase in quarterly net income to $63.4 million. Additionally, global medical cannabis sales drove growth to a substantial 42%.

In response to market demand and investor confidence, they successfully completed a tender offer for common shares, generating approximately CA$38,826,875 in gross proceeds. Including the full exercise of the over-allotment option, it reflects positive sentiment in the company’s future prospects. So, Aurora’s commitment to achieve 2024 positive free cash flow further solidifies its position as a strong investment option.

Also, ACB is taking a strategic step into the Canadian adult-use cannabis market with the introduction of their innovative brand, TASTY’S. Positioned as prioritizing taste, potency, and affordability, TASTY’S aim to distinguish itself in the marketplace. The brand promises highly potent cannabis with exceptional flavors such as blue raspberry, green apple, and watermelon.

Recognizing the growing importance of the pre-roll category, TASTY’S will launch in two main formats of vapes and infused pre-rolls. Pre-rolls with 50% THC and 510 vapes with up to 1,000mg THC are designed to meet the preferences of cannabis enthusiasts.

As of this writing, Gabriel Osorio-Mazzilli did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Gabriel Osorio is a former Goldman Sachs and Citigroup employee. He possesses discipline in bottom-up value investing and volatility-based long/short equities trading.