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Top 8 Cannabis Stocks for March 2024
Best cannabis stocks to watch

Medical cannabis is now permissible in 37 states, while 23 states have fully legalized its use. However, at the federal level, its status remains largely unchanged since the 1970s, with cannabis still classified alongside heroin, ecstasy, and LSD.

Following a recommendation by the U.S. Department of Health and Human Services to ease restrictions on marijuana in August, cannabis stocks experienced a surge. Nonetheless, the pace of legalization has been slower than anticipated, underscoring both the potential for growth and the uncertainty facing marijuana companies.

In Canada, marijuana was legalized nationwide in 2018, enabling many American cannabis firms to list their shares on Canadian exchanges.

For investors willing to take a chance amid the turbulent period for Best cannabis stocks to watch, here are eight potential contenders. It’s important to note that these companies are high-growth stocks with relatively small market capitalizations, which means they also carry significant downside risk.

Dangers of Investing in Cannabis Stocks

There are specific hazards associated with investing in best marijuana stocks that investors should be fully aware of. These encompass legal and political uncertainties, along with unconventional financial limitations.

Legal uncertainties. The possession and sale of marijuana remain illegal under federal law in the U.S., with only four states enforcing a complete prohibition. The remaining 46 states have adopted various legalization frameworks governing cannabis.

Financial limitations. Due to federal prohibition, banks face stringent restrictions in dealing with cannabis-related businesses. This poses challenges for some U.S. marijuana enterprises in accessing essential financial services.

Supply and demand fluctuations. With the combination of legal complexities and its status as a rapidly expanding industry, the cannabis market is susceptible to supply-and-demand imbalances. Initial expansion efforts by Canadian growers to meet recreational marijuana demand resulted in oversupply, driving prices down and affecting corporate revenues.

Profitability uncertainties. The majority of listed cannabis companies have yet to achieve profitability and carry substantial debt loads, increasing the risk of cash depletion. Such growth-oriented stocks often resort to capital raising through share issuance, potentially diluting existing shareholders’ value.

OTC market risks. Top cannabis stocks trade in over-the-counter markets, exempting them from regular financial disclosures and minimum market capitalization requirements. OTC stocks may have opaque financials and limited liquidity, posing challenges for trading.

Best cannabis stocks to watch

Top Cannabis Stocks in March 2024

Curaleaf Holdings (CURLF)

Curaleaf is a big cannabis company that a lot of people pay attention to. Following a recommendation from the U.S. Department of Health and Human Services to relax restrictions on marijuana, its stock surged by 44% within 48 hours. Despite this upswing, the stock has experienced a 34% decline over the past year, reflecting the challenges faced by cannabis investors, particularly when compared to the S&P 500’s 15% increase during the same period.

Nevertheless, CURLF maintains its position as the largest company in the cannabis sector, boasting a revenue of $1.3 billion last year, the highest among its peers. While its price-to-sales ratio ranks third, some investors may find the premium valuation justified given the sector’s inherent risks.

Curaleaf’s main office is in Wakefield, Massachusetts, but its stock is traded on the Canadian Securities Exchange and in the U.S. OTC market as an ADR. If you want to invest in Curaleaf, make sure your brokerage account lets you trade in the OTC market.

Green Thumb Industries (GTBIF)

Green Thumb Industries is an American company that sells cannabis products. It has more than 80 stores and over 15 factories in the U.S.

The company has grown a lot. It started in 2014 and made over $1 billion last year, which was almost 14% more than the year before. Now it’s one of the biggest cannabis companies in the world that anyone can buy shares of.

When the Department of Health and Human Services said good things about the cannabis industry, the company’s stock went up by 37% in just two days. But even though it went down by about 15% over the past year, it’s still doing better than many other similar companies. In fact, it’s the second-best-performing stock on the list during that time.

Even though it’s one of the biggest cannabis companies you can invest in, it’s still not that big compared to others. And like all cannabis companies, its stock can go up and down a lot. For example, even though it made a lot more money in 2022, its stock price fell by over 60% in the same period.

Green Thumb Industries is another American cannabis company that you can invest in. Its stock, which you can buy with the ticker symbol GTBIF, is traded on the U.S. OTC market.

Verano Holdings (VRNOF)

Verano Holdings owns brands like Encore, Alexia, and MUV in the U.S. Despite being a new company, it went public in February 2021. Like many others in its field, Verano faced challenges last year, with its value dropping by 42%.

Although it’s a U.S. company, it’s listed on the Canadian Securities Exchange (CSE) due to a reverse takeover. But it can still be traded in the U.S. as an ADR on the OTC market.

Compared to others, Verano Holdings is relatively new and has a shorter history. It hasn’t shown consistent revenue growth for as long as others in the industry have. However, in 2022, its revenue increased significantly, ranking third highest among its peers. This potential for growth might appeal to some investors, despite the higher risk involved.

Trulieve Cannabis (TCNNF)

Trulieve Cannabis has been a bad investment lately. Its value has been around $1 billion, dropping by 56% in the past year. Despite selling a lot more, its stock is still doing poorly. Even though its sales went up by 32% last year, the stock’s price dropped the most compared to other companies. But because the stock is cheaper now, the company’s value compared to its sales is lower than that of other big companies. TCNNF is another stock like Trulieve’s that’s listed on the CSE and traded on the OTC market in the U.S.

Cresco Labs (CRLBF)

Cresco Labs sells a lot of cannabis products in the U.S. They have stores in seven states and added five new ones this year, making 68 in total. This growth could mean good things for their stock.

But their revenue isn’t growing much. We usually like companies with growing revenue, but Cresco’s increase last year was small. That’s a worry because, in the cannabis industry, making money can be hard.

On the bright side, Cresco’s prices compared to their sales are low. If they can make more money in the future, this could be interesting.

They were supposed to join with Columbia Care, which would have made them the biggest cannabis company. But they decided not to because the industry is tough right now. This might make their stock less up and down.

Cresco Labs trades as a Canadian company on U.S. markets.

Glass House Brands (GLASF)

Glass House Brands, a vertically integrated cannabis firm based in California, carries added risk due to its comparatively small market cap in a volatile industry. Nonetheless, its potential is evident, as evidenced by its 19% stock return over the past year, contrasting with significant declines in its peers.

The second-quarter earnings showcased significant improvement, with CEO Kyle Kazan dubbing it the company’s “best quarter yet.” Year-over-year net sales surged by 171%, while the gross margin reached 55%, a stark contrast to the mere 2% from the previous year.

Such rapid growth may be challenging to maintain, especially considering Glass House Brands’ higher price-to-sales ratio compared to similar companies with comparable market caps. Nevertheless, the company’s upward trajectory makes it an intriguing prospect for investors with a higher risk tolerance.

Trading as a Canadian ADR on the U.S. OTC markets, Glass House Brands presents clear risks but also promises potential rewards for those willing to take on the volatility.

The Cannabist Company Holdings (CBSTF)

The Cannabist Company, previously known as Columbia Care, canceled a big deal with Cresco Labs earlier this year, which would have made it one of the largest cannabis companies.

Their stock dropped by 79% in the past year, even though it had a huge 77% increase for 48 hours after the Department of Health and Human Services recommended relaxing marijuana regulations in August.

But there’s some good news: their revenue is growing well. And because their stock price is falling, their price-to-sales ratio is very low.

Now that the uncertainty about the merger is gone, and with positive sales numbers and a low valuation, there’s more risk involved, but there’s also potential for growth.

The Cannabist Company trades as a Canadian ADR on the U.S. OTC markets.

Best cannabis stocks to watch

WM Technology (MAPS)

WM Technology offers investors a unique opportunity to tap into the cannabis industry through its provision of technology and software infrastructure tailored for this sector.

When considering MAPS, it’s crucial to acknowledge its smaller size, which impacts its risk profile. Despite this, the company has demonstrated promising growth, with revenue upticks noted in the past year. Its latest quarterly performance surpassed analyst projections, yielding modest earnings per share of 1 cent, contrasting with a 14-cent loss per share a year ago. Moreover, its price-to-sales ratio remains relatively low.

However, the risk associated with MAPS becomes evident when examining its stock performance, which has plummeted nearly 90% since the beginning of 2021. This underscores the importance of cautious investment strategies. Nonetheless, for those inclined to take on higher risk, it’s noteworthy that MAPS is listed on the Nasdaq.

The Approach of Creating the Best Cannabis Stocks

The list includes publicly traded marijuana companies traded on North American stock exchanges. These stocks must have a market cap of over $75 million, revenue exceeding $50 million in 2022, and a price-to-sales ratio below 2.50.

Cannabis companies are generally risky investments and often not profitable. So, we focused on companies with positive revenue growth over the past three years, which can indicate potential profitability. The only exception is Verano Holdings, due to limited sales data.

Despite their small size, we set a minimum market cap of $75 million and excluded companies with sales below $50 million last year. Some top weed stocks are listed on both the Canadian and U.S. markets. Remember, most cannabis companies are small and risky, so be cautious.

To understand our rating process, read our guide on how Forbes Advisor evaluates investment products. These marijuana stocks to buy selections are made by experienced analysts but may not suit your portfolio. Conduct thorough research before investing to match your financial goals and risk tolerance.

The Status of the US Cannabis Market in 2023

The state of the cannabis market in the United States in 2023 has been underwhelming for investors. Despite initial excitement, U.S.-listed cannabis stocks, particularly those of multi-state operators (MSOs), have faced challenges. Intense competition in the U.S. market has led to pricing pressures, causing shares to decline.

The price of marijuana has notably dropped, with a significant 13% decrease in the cost of a gram from $10.83 to $9.43 between Q3 of 2022 and the preceding year—the largest decline observed over a year.

Although cannabis legalization has progressed at the state level in the U.S., there has been limited advancement in federal cannabis reform. The Marijuana Opportunity Reinvestment and Expungement Act (MORE), aiming to decriminalize cannabis by removing it from the Controlled Substances Act, has yet to pass the Senate.

Investment analysts view Canada as offering greater potential for long-term cannabis investors. Since the nationwide legalization of recreational cannabis in 2018, Canada has seen a flourishing market for public cannabis companies.

Several American cannabis firms, such as Curaleaf, Green Thumb Industries, and Trulieve, are listed on Canadian exchanges and trade as American Depository Receipts (ADRs) in the U.S. over-the-counter (OTC) market.

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