The marijuana industry got hammered on the stock market last year due to regulatory hiccups. However, recent developments point to a more encouraging future. Nevertheless, the current macro-environment has played spoilsport leading to a massive sell-off in marijuana stocks. Hence, it has created an interesting buying opportunity for investors to pick up marijuana stocks to buy on the dip.
The marijuana sector is likely to expand at an annual growth rate of roughly 25.5% through 2030, and investors are looking to profit. As more states and nations legalize cannabis, more opportunities will emerge for current business owners and entrepreneurs. Therefore, there’s plenty of upside potential with investing in the sector and for users to effectively diversify their portfolio.
Constellation Brands logo on a phone screen in front of a blue and purple background. STZ stock.
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Constellation Brands (NYSE:STZ) is an alcoholic beverages giant that operates one of the most diverse product portfolios in the space. It is the third largest beer business in the U.S. and the leading high-end beer supplier at this time.
Its investment in Canadian cannabis giant Canopy Growth (NASDAQ:CGC) is an indirect marijuana play. Moreover, though its investment remains a drag on its top and bottom lines, its hugely successful core business comfortably offsets the losses from its investment at this time.
Its business has performed consistently over the past several years. Its most recent quarter reported non-GAAP earnings per share (EPS) of $2.66, comfortably beating analyst estimates by 15 cents. Additionally, it represents a 16.6% increase in sales from last year to $2.36 billion, $200 million better than analyst consensus. Also, it affirmed its strong forecast for the year and issued an 80-cent quarterly dividend yielding 1.3%.
Trulieve Cannabis (TCNNF)
Florida licensed medical marijuana cannabis provider Trulieve
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Trulieve Cannabis (OTCMKTS:TCNNF) is one of the top multi-state operators in the U.S., with a strong presence across several of the top cannabis markets. Over the past couple of years, it’s been expanding its business at a breathtaking pace, evidenced by the substantial growth in its asset base. Consequently, its sales have shot up over 276% from 2019 to 2021.
It continued its fine form last year, with another strong showing on its top line. It reported sales of $318.3 million, representing a 64% improvement from the prior-year period.
Despite re-opening headwinds, demand for its products remained relatively robust. Margins should remain steady despite the aggressive expansion of its operations. Moreover, in light of the bearish market, its stock has dipped considerably of late, adding to its attractiveness.
High Tide (HITI)
multiple jars of different sizes carrying marijuana
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High Tide (NASDAQ:HITI) offers various products and services to its cannabis customers and intends to become the leading premier retail-focused and vertically integrated business. Its management continues to acquire smaller players, which will help increase sales growth in the upcoming years.
It operates various THC and CBD brands, which has helped diversify its revenue stream immensely. We should expect significantly less sales volatility as its management targets different segments and geographies.
HITI has built strong brand equity over the past few years, partnering with well-known artists and singers. By the end of 2022, it is intended to grow its Canadian retail portfolio by at least 150 locations. Though it focuses mainly on Ontario, it will look to enter the British Columbian market in the near term.
According to reports, the Canadian recreational cannabis business is expected to grow at a 13.4% CAGR between 2021 to 2030. Therefore, there’s healthy upside potential with HITI stock.
Green Thumb Industries (GTBIF)
Marijuana plants growing in a greenhouse.
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Green Thumb Industries (OTCMKTS:GTBIF) has been one of the most consistent marijuana operators over the past several years. Its five-year revenue growth has averaged roughly 168%, while its year-over-year EBITDA growth is at a healthy 47%. Its sales grew by a whopping 61% last year, while its stock trades at just 2.1 times forward sales.
GTBIF is a top cannabis operator in the U.S., operating across 15 markets. These include both developed adult-use markets such as Nevada and medical-only markets such as Florida. As time passes, the U.S. cannabis market is expected to grow at a monstrous pace, with almost 70% of the population supporting legalization.
Adult use sales came online for New Jersey in April and are expected to grow rapidly. It operates three dispensaries, with two already online for adult-use sales in the state, which could be a significant growth driver down the line.
GrowGeneration (GRWG)
Cannabis leaves and stems are grown hydroponically in the garden.
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GrowGeneration (NASDAQ:GRWG) is a novel cannabis player specializing in hydroponics. Hydroponics is an emerging industry involving growing plants without soil and other traditional farming methods.
Due to the oversupply of outdoor cannabis, GRWG is likely to suffer this year, but its expansion plans for 2023, will more than makeup for its near-term troubles.
The company plans to take advantage of the fragmented market and expand its retail garden centers in the future. It has identified market opportunities in several states. Additionally, it plans to open up 15 to 20 new locations this year to usher in the next era of growth for the business.
Planet 13 Holdings (PLNHF)
Closeup of mobile phone screen with logo lettering of cannabinoid company planet 13 holding
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Planet 13 Holdings (OTCMKTS:PLNHF) is a leading vertically integrated marijuana business. It operates mainly in California and Nevada and has been actively expanding beyond these states.
Moreover, it has a leading presence in the Las Vegas strip, where it operates “superstores,” massive retail locations where customers can effectively shop for a wide variety of owned brands and top-selling cannabis products.
Over the past couple of years, it has suffered immensely due to the drop in tourist volumes in the Las Vegas strip due to the pandemic. However, a recently released report from The Las Vegas Convention and Visitors Authority showed that the overall situation in terms of visitation improved drastically in 2021. Hence, we could expect a meaningful jump in results in the upcoming quarters, which should result in a strong pullback in its results.
Curaleaf Holdings (CURLF)
marijuana stocks Hand gently holding rich soil for his marijuana plants
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Curaleaf Holdings (OTCMKTS:CURLF) is a Massachusetts-based MSO that has witnessed triple-digit growth across its top line. It reported its first-quarter revenues, where the figure improved by 20% on a year-over-year basis. Its EBITDA (earnings before interest, taxation, depreciation and amortization) has grown 16% to $73 million.
It has faced short-term weakness in cannabis sales. However, over the long term, its positioning is likely to improve substantially.
It is also spreading its tentacles to the European market, where it has completed its acquisition of EMMAC Life Sciences, which it is rebranding to Curaleaf International. It will allow the company to access some leading medical cannabis markets, including the U.K., Germany, Italy, Spain and Portugal.
On the date of publication, Muslim Farooque did not have (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.
