Canada’s Liberal government has paved the way for recreational use in the near future, boosting the value of these Canadian marijuana stocks or pot stocks
Below you will find 10 of the best Canadian marijuana stocks covered by our analysts
SmallCapPower | Winter 2020: Canadian licensed producers continued to see more selling action into the beginning of November. As a benchmark, the Horizons Marijuana Life Sciences Index (TSX:HMMJ) is down 62% from its 2019 high of $23.65 on March 19, 2019. On November 14, 2019, Canopy Growth (TSX:WEED) and Aurora Cannabis (TSX:ACB) reported CYQ3 results, which were a disappointment to investors as revenue decreased quarter-over-quarter. Aurora posted revenue of $75.2M, a 24% decline, while Canopy growth posted revenue of $76.6M, a 15% decline. Both attributed poor top-line growth to blotched retail store roll-out in Ontario and Quebec. This follows two months of disappointing news in September and October, while its unlikely that cannabis stocks are going to recover significantly over the next three-months. We have, however, pick our top-10 cannabis stocks who and financially prudent and we think could do well into the second half of 2020.
If you are in the market for strong potential returns and are willing to stomach some risk, then check out our top 10 Canadian marijuana stock picks.
*Share price data as at November 25, 2019, data obtained from S&P Capital IQ
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1. MediPharm Labs Corp. (TSXV:LABS) – $3.78
MediPharm Labs is the first company in Canada under the ACMPR without first receiving a cultivation license to become a licensed producer for cannabis oil production. MediPharm Labs produces purified, pharmaceutical-like cannabis oils and concentrates through its cGMP and ISO standard clean rooms laboratory. The Company currently has a 70,000 sq. ft. facility with 150,000 kg capacity and is planning to expand to 250,000 kg capacity by Q2/19. MediPharm Labs has invested in expert, state-of-the-art technology and extraction methods to deliver safe and precisely dosed cannabis products to consumers and patients. On May 14, 2019, MediPharm Labs announced they entered into a multi-year supply agreement with Cronos Group Inc. It is expected that MediPharm Labs will supply Cronos Group with about $30M of cannabis concentrate over 18-months, and depending on renewal and purchase options, possibly up to $60 M over 24-months.
- Market Cap: $494.7M
- 30-Day Return -25.2%
- 90-Day Return -22.4%
- YTD-Return: +111.5%
- 90-Day Average Trading Volume: 541,840
2. WeedMD Inc. (TSXV:WMD) – $1.13
WeedMD is a Canadian federally-licensed cultivator and distributor of cannabis and cannabis extracts for medical and recreational markets. As of now, the Company owns and operates two licensed facilities: 1) in Aylmer, Ontario, a 26,000 sq. ft. facility and; 2) a 158-acre property located in Strathroy, Ontario, which also includes a 616,000 sq. ft. greenhouse facility. Overall, WeedMD has 136,000 sq.ft of licensed production space with 150,000 kg of fully-funded capacity. Additionally, the Company is expecting to expand its footprint to more than 550,000 sq. ft. of indoor and greenhouse production space by the end of 2019. On October 16, 2019, WMD announced it secured a Health Canada amendment approval for its 50,000 sq. ft processing facility in Strathroy. On November 5, 2019, the Company announced that it had completed harvest of its 27-acre outdoor grow.
- Market Cap: $129.6M
- 30-Day Return -13.6%
- 90-Day Return -32.1%
- YTD-Return: -17.6%
- 90-Day Average Trading Volume: 348,240
3. Valens GroWorks Corp. (TSXV:VGW) – $3.24
Valens GroWorks is a pure-play cannabis extraction company with 425,000 kg of extraction capacity. Valens has signed extraction agreements with: Organigram, Tilray, Canopy Growth, and HEXO Corp. Valens also has a strategic partnership with ThermoFisher Scientific, one of the world’s leading manufacturers of lab equipment, in addition to an ISO 17025 labs accreditation, which allows the Company to conduct standardized testing for over 400 different metals, pesticides, terpenes, residual solvents, microbials, and cannabinoid profiles. On October 15, 2019, VGW announced strong FQ3/19 financial results, highlighted by revenue of $16.5M, adj. EBITDA of $9.8M, and net income of $5.9M.
- Market Cap: $402.4M
- 30-Day Return +2.3%
- 90-Day Return -3.7%
- YTD-Return: +106.6%
- 90-Day Average Trading Volume: 182,410
4. Nextleaf Solutions Ltd. (CSE:OILS) – $0.34
Cannabis Extraction Technology
Nextleaf Solutions is a licensed extraction technology company that has created a portfolio of issued and pending patents that relate to the Company’s industrial-scale process of generating purified cannabinoid distillate, which is a cannabis concentrate that is used in value-added products. Nextleaf has a portfolio of eight issued patents and over 35 pending patents pertaining to the production of high-purity, cannabinoid rich distillate, the key ingredient used in the manufacturing of standardized THC and CBD infused products. Once cannabis concentrates become legal in Canada on October 17, 2019, the Company plans to start commercializing its intellectual property portfolio with B2B processing services to licensed cultivators. On October 16, 2019, Nextleaf announced it added Dr. Sherry Boodran, a former Senior Regulatory Compliance Office with Health Canada, to its Board.
- Market Cap: $36.2M
- 30-Day Return -17.3%
- 90-Day Return -46.6%
- YTD-Return: N/A
- 90-Day Average Trading Volume: 59,100
5. Village Farms International, Inc. (TSX:VFF) – $8.36
Village Farms International is a vertically-integrated greenhouse grower in North America. The Company use hydroponic growing methods in glass-enclosed facilities to grow its premium-quality products. Currently, the Company has six greenhouses that cover a total of 9.2M sq.ft. As well, the Company has entered into the cannabis space with its joint ventures (JV) with Emerald Health Therapeutics and Nature Crisp LLC to create “Pure Sunfarms Corporation” and “Village Fields Hemp USA LLC,” respectively. On August 12, 2019, the Company reported Q2/19 financial results, highlighted by a 125% increase in sales of dried cannabis to $32.4M when compared to Q2/18. On October 22, 2019, VFF completed its $28M bought deal at $9.40/share. Village Farms is expected to announce its Q3/19 financial results on or about November 14. Analysts are estimating EPS of $0.17 on revenue of $59M.
- Market Cap: $438.1M
- 30-Day Return -19.0%
- 90-Day Return -36.7%
- YTD-Return: +100.0%
- 90-Day Average Trading Volume: 746,690
6. Cronos Group Inc. (TSX:CRON)- $9.18
Cronos is a globally-diversified and vertically-integrated cannabis company that currently has operations in five continents. The Company has two wholly-owned Canadian licensed producers: 1) Peace Naturals Project Inc., a global health and wellness platform; and 2) Original BC Ltd., a recreational adult-use Canadian licensed producer that is located in Okanagan Valley, BC. Cronos’ business strategy is to focus on building an international iconic brand portfolio in addition to developing its intellectual property. On August 8, 2019, the Company released its Q2/19 financial results, which showed net revenue of $10.2M, an increase of 58% QoQ from $6.5M in Q1/19. This was driven mainly by increased sales of CBD oil.
- Market Cap: $3,155.8M
- 30-Day Return -23.4%
- 90-Day Return -39.7%
- YTD-Return: -37.8%
- 90-Day Average Trading Volume: 808,690
7. Trulieve Cannabis Corp. (CSE:TRUL)- $15.88
US Multi-State Operator
Trulieve is a seed-to-sale operation in the state of Florida, with plans to acquire additional facilities in Massachusetts, California, and Connecticut. The Company claims to be the largest, fully-licensed medical cannabis company in the State of Florida, with over 1.6M sq. ft of cultivation space yielding ~55,000 kg annually. Trulieve is in the process of constructing an additional 72,000 sq. ft, which would increase production capacity by 10,000 kg. TRUL also has a network of 37 dispensaries selling branded products, with a total of 240 stock keeping units (SKUs) and over 203,600 patients as of August 31, 2019. Trulieve is anticipating having 44 dispensaries open by year end.
- Market Cap: $1,752.3M
- 30-Day Return +21.2%
- 90-Day Return +51.5%
- YTD-Return: +46.4%
- 90-Day Average Trading Volume: 186,000
8. Curaleaf Holdings, Inc. (CSE:CURA)- $7.96
US Multi-State Operator
Curaleaf a vertically-integrated, multi-state cannabis operator (MSO) in the United States. As of August 2019, Curaleaf operates in 12 states with 48 dispensaries (without Grassroots and Select), 13 cultivation sites, and 12 processing sites. On July 17, 2019, Curaleaf announced it would acquire Grassroots, the largest private MSO in the United States. Grassroots has 61 dispensary licenses (20 operational in 5 states), 8 cultivation licenses (5 operational in 5 states), and 7 processing licenses (5 operational in 5 states). This follows an announcement from May 1, 2019, when Curaleaf announced its plans to acquire Select Brands, a leading U.S. West Coast MSO. The transaction is expected to add ~300,000 sq. ft of cultivation space and 10 dispensaries (operational and pending). The combined entity, with the Grassroots and Select acquisitions, will operate in 19 states, with 68 operational dispensaries, 26 processing and 20 cultivation facilities and licenses to open 131 dispensaries across the U.S. On October 29, 2019, Curaleaf repriced the Select transaction 40% lower, due to deteriorating market conditions. Curaleaf was expected to issue 95.5M shares valued at ~$1.3B with an additional earn out of $260M. Now, CURA is going to issue 55M shares.
- Market Cap: $3,727.8M
- 30-Day Return +9.9%
- 90-Day Return -13.7%
- YTD-Return: +20.4%
- 90-Day Average Trading Volume: 252,360
9. 4Front Ventures Corp. (CSE:FFNT) – $0.60
US Multi-State Operator
4Front Ventures is an MSO that owns, operates or manages six cultivation and production facilities and 11 retail facilities across eight states. FFNT has developed two >50,000 square-foot indoor cultivation facilities in Washington with yields of more than 300 g/sq. ft. In Washington, 4Front operates one of the largest cannabis product manufacturing facilities in the world, where it produces some of its top-selling brands of flower, edibles, and oil-based products. The Company is focused on premium indoor cultivation, extraction, manufacturing, and branding of flower, edible, and derivative products. 4Front has cultivation and processing licenses in Washington, Illinois, Michigan, California, Massachusetts, and Arizona, and now also has retail licenses in Illinois, Michigan, Massachusetts, Maryland, Pennsylvania, and Arizona.
- Market Cap: $321.2M
- 30-Day Return -1.7%
- 90-Day Return -23.7%
- YTD-Return: -37.0%
- 90-Day Average Trading Volume: 73,660
10. Charlotte’s Web Holdings, Inc. (TSX:CWEB) – $12.97
Charlotte’s Web Holdings is a leader in the production and distribution of hemp-derived cannabidiol (CBD) wellness products. The Company aims to deliver quality products through the use of proprietary hemp genetics which are manufactured into hemp-derived CBD extracts, containing a full spectrum phytocannabinoids. CWEB products include CBD Oil tinctures, CBD capsules, CBD topicals, and CBD pet products. Founded by the Stanley Brothers, the Company has over 4,000 retail locations and produced 675,000 lbs of hemp in 2018. The Company currently has a 40,000 sq. ft. manufacturing and R&D facility, with plans to expand to a 130,000 facility in the future. CWEB has 300 acres of hemp planted in 2018 and cGMP certified facilities specializing in CO2 extraction and alcohol extraction techniques.
- Market Cap: $1,278.7M
- 30-Day Return -30.6%
- 90-Day Return -45.6%
- YTD-Return: -20.3%
- 90-Day Average Trading Volume: 626,940
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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