Over the last several weeks, U.S. CBD stocks have been on a tear.
GW also markets and sells Sativex® (delta-9-tetrahydrocannibinol and cannabidiol in the EU; nabiximols in the US), which is an oromucosal spray that contains the principal cannabinoids delta-9-tetrahydrocannibinol (THC) and cannabidiol (CBD), as well as specific minor cannabinoids and other non-cannabinoid components. It was developed for the treatment of spasticity associated with multiple sclerosis and spinal cord injury and is currently under late-stage clinical programs in order to get approval from the FDA.
The cannabis legalization movement could propel these four CBD stocks ahead next year.
In the U.S., subject to compliance with all applicable U.S. federal and state laws, Village Farms is pursuing a strategy to become a leading developer and supplier of branded and white-labeled CBD products targeting “big box” and other major retailers and consumer packaged goods companies, and with one the largest greenhouse operations in the country, is well positioned for the potential federal legalization of high-THC cannabis.
Of the 4 companies on this list, Village Farms International, Inc. (NASDAQ:VFF) is the only one that is currently profitable.
And in early December, in another stunning victory, the House of Representatives voted in favor of removing marijuana from the federal Controlled Substances Act, which boosted CBD stocks even higher.
Only one of the companies listed below reported positive EPS growth in the most recent quarter.
These are the top marijuana stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
Here are the top 5 marijuana stocks with the best value, the fastest growth, and the most momentum.
Fastest Growing Marijuana Stocks
The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution, and sale of medical and recreational marijuana. Cannabis has begun to gain wider acceptance and has been legalized in a growing number of nations, states, and other jurisdictions for recreational, medicinal, and other uses. Some of the biggest companies in the marijuana industry include Canopy Growth Corp. (CGC), Cronos Group Inc. (CRON), and Tilray Inc. (TLRY). Many big marijuana companies have continued to post sizable net losses as they focus on investing in equipment to speed up revenue growth, which remained strong despite the economic disruption caused by the pandemic.
Momentum investing is a factor-based investing strategy in which you invest in a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks which have outperformed the market will often continue to do so, because the factors that caused them to outperform will not suddenly disappear. In addition, other investors, seeking to benefit from the stock’s outperformance, will often purchase the stock, further bidding its price higher and pushing the stock higher still. These are the stocks that had the highest total return over the last 12 months.
These are the marijuana stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in the early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves, or returns to, profitability. The P/S ratio shows how much you’re paying for the stock for each dollar of sales generated.
Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have outperformed the broader market. MJ has provided a total return of 61.8% over the past 12 months, above the Russell 1000 index’s total return of 43.5%. These market performance numbers and all statistics in the tables below are as of June 25, 2021.