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 | February 19, 2019: The Horizons Marijuana Life Science Index ETF (TSX:HMMJ) has recovered ~47% since it’s most recent bottom of $14.04 on December 21, 2018, however, it is still down from its all time high of $26.05 on October 15, 2018. Major catalysts driving this recovery include;
- The passing of the US Farm Bill on December 21, 2018, which legalized industrial hemp (defined as cannabis with <0.3% THC),
- Florida Governor Ron DeSantis announcing that the state will appeal its ban against smokable flower in its medical cannabis program,
- Israel and Columbia both announcing that they would allow cannabis exports, and;
- Cannabis companies’ earnings with Aurora, Supreme, and Canopy reporting results during the week of February 11-15 giving investors a first glimpse of how recreational sales will look.
Upcoming catalysts include the US House Financial Services Committee hearing titled Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses – which would open up the US cannabis industry to financial services. 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.
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1. Cronos Group Inc. (TSX:CRON)- $ 28.11
Cronos Group is a vertically integrated, Canada-based cannabis company with a diversified global presence. The Company invests in establishments that are licensed or are seeking a license to produce and sell marijuana. Focusing investment efforts on firms located in Canada, Cronos Group operates through its subsidiaries and producers. The Company has several international distribution and production platforms and strives increase its global presence through developing intellectual property and building an international portfolio. The portfolio includes Peace Naturals, Original BC, and Whistler Medical Marijuana Company, all companies licensed to produce, sell, and cultivate medical marijuana or cannabis oil. The Company’s existing capacity is 355,500 sq. ft., with an annual estimated production capacity of 40,150 kg. With an expansion underway, Cronos Group expects an increase of 910,000 sq. ft. of its production facility, with an estimated annual production capacity of 77,000 kg. On December 7, 2018, the Company released that it has entered into an agreement with Altria Group, Inc. (NYSE:MO), which has agreed to a strategic investment of ~C$2.4 Billion into Cronos Group.
- Market Cap: $ 5.0 Billion
- Revenue: $3.8 Million (Q3 2018)
- 1-Month Total Return: +55.3%
- 1-Year Total Return: +203.5%
2. Canopy Growth Corp. (TSX:WEED) – $ 62.81
Canopy Growth Corporation is a diversified multi-brand cannabis and hemp company, offering distinct brands and curated cannabis products with varieties in dried, oil and soft-gel capsule forms. The Company’s extensive supply agreements with Canadian provinces allow Canopy to lock in sales of 67,500 kg of product per year. The Company has the largest licensed production platform in Canada, with over 600,000 sq. ft. of production space. To further solidify their leading position in the market, the Company expects to have up to an additional 5,000,000 sq. ft. of production over the next 12 months. On August 15, the Company announced a $5 Billion-dollar investment by Constellation Brands (NYSE: STZ) to establish a global position and development of cannabis infused beverages. More recently, the Company reported its Q2 2019 financial results on November 14, 2018. Canopy reported $23.3 Million in revenue, an average selling price of $9.87/gram, and cash on hand of $429 Million. On January 14, the Company was granted a license by New York State to process and produce hemp. Canopy Growth intends to invest between US$100M to US$150M in its New York operations.
- Market Cap: $ 21.6 Billion
- Revenue: $ 23.3 Million (Q2 2019)
- 1-Month Total Return: +10.1%
- 1-Year Total Return: +131.3%
3. FSD Pharma (CSE:HUGE)- $0.27
FSD Pharma is an ACMPR licensed cannabis company utilizing hydroponic production techniques to cultivate and process cannabis. Operating out of Cobourg, Ontario, the Company’s potential 3.8 million sq. ft. production facility could become the world’s largest facility of its kind upon completion. FSD Pharma is involved in several partnerships that provide the Company with strategic exposure to a variety of cannabis products, including pharmaceuticals, beverages, and topicals. The Company aims to target all aspects of the cannabis industry – cultivation, processing, extracts and research and development. FSD Pharma maintains a strong balance sheet position with over $35 million in cash and equivalents, allowing the company to continue to meet its short-term obligations and make strategic investments. On October 22, 2018, the Company signed an LOI to acquire Therapix Biosciences, a specialty pharmaceutical company developing cannabinoid-based treatments.
- Market Cap: $ 364.0 Million
- Revenue: $13.8 Million (3 months ended September 30, 2018)
- 1-Month Total Return: -18.2%
- 1-Year Total Return: +125.0%
4. Aurora Cannabis Inc. (TSX:ACB) – $ 9.30
Aurora Cannabis is a licensed producer and distributer of medical cannabis. To prepare for the legalization of the adult consumer market for cannabis, the Company is substantially increasing its production capacity. ACB expects to have just under 1,000,00 sq. ft. of licensed production space and plans to produce at least 270,000 kilograms of cannabis annually. The Company also has 20% ownership interest in Liquor Stores N.A., the dominant alcohol retail chain in Western Canada. It intends to convert several existing outlets, as well as develop new stores, for the sale of cannabis to the recreational market. Additionally, the Company has signed supply agreements with 12 provinces and territories comprising over 98% of the Canadian population. Aurora has also embarked on an aggressive international expansion strategy that aims to have operations and/or sales in Germany, Denmark, Italy and Australia. On September 17, Bloomberg reported that Aurora Cannabis and Coca Cola (NYSE: KO) were in discussion for a partnership to develop cannabis related beverages. So far, no formal deal has been announced. On February 11, Aurora announced its Q2 2019 financial results. The Company reported revenues of $54.2 Million, up 83% from the previous quarter.
- Market Cap: $ 9.3 Billion
- Revenue: $ 54.2 Million (Q1 2019)
- 1-Month Total Return: -3.0%
- 1-Year Total Return: -6.9%
5. Supreme Cannabis Company Inc. (TSXV:FIRE) – $ 1.85
Supreme Cannabis Company is a licensed producer and distributor of cannabis under the ACMPR, focused on cultivating premium dried sun-grown cannabis flowers on a commercial scale through its subsidiary, 7ACRES. Currently, 7ACRES operates 40,000 sq. ft. of operational capacity expected to have an average output of approximately 5,000 kilograms of dried cannabis per year. Once completed, the Company expects the facility will span more than 342,000 sq. ft, producing 50,000 kilograms of premium dried cannabis per year at full capacity. On September 10, the Company announced a supply agreement with Tilray (NASDAQ: TLRY) that is estimated to be in excess of $2 million. On November 13, 2018, FIRE announced a partnership with MediPharm Labs to launch a line of cannabis oil products. On February 8, the Company received approval from the New York Depository Trust Company to make the Company’s shares DTC eligible.
- Market Cap: $ 536.4 Million
- Revenue: $ 7.7 Million (Q2 2019)
- 1-Month Total Return: +4.7%
- 1-Year Total Return: -11.4%
6. Cannex Capital Holdings Inc. (CSE:CNNX)- $ 1.17
Cannex Group Holdings Inc. is a Canada based company with cannabis operations in Washington and California. Cannex is focused on premium indoor cultivation, extraction, manufacturing and branding of edible and derivative products, as well as retail operations. The Company’s subsidiary, BrightLeaf Development LLC, is the largest producer/processor in Washington State. Cannex is also in the process of acquiring Jetty Extracts, one of the largest processors and extractors in California. Cannex plans to produce from two indoor cultivating facilities with a combined 30,000 sq. ft. and 19,000 kg/year capacity, equating to one of the highest yields in the industry at 633 grams/sq. ft. On November 1, 2018, the Company announced it had acquired a 10% interest in Soma Group Holdings, a New Zealand-based cannabis start-up providing Cannex with an innovative research platform.
- Market Cap: $ 215.0 Million
- Revenue: $ 4.0 Million (Q2 2019)
- 1-Month Total Return: +41.0%
- 1-Year Total Return: -12.7%
7. Liberty Health Sciences Inc. (CSE:LHS) – $ 1.10
Liberty Health Sciences was launched to acquire and operate U.S.-based companies in the medical cannabis market. Liberty adds value to acquired companies through its expertise in commercial-scale greenhouse growing using low cost, seed-to-sale certified processes, as well as automation and processing methods. In May 2017, the Company entered an exclusive Management Agreement with Chestnut Hill Tree Farm LLC, a state-licensed Florida nursery, as a dispensing organization of medical cannabis to patients in the State of Florida. Chestnut holds one of eight licenses granted in Florida, which currently represents approximately 14% of U.S. medical cannabis. On September 13, the Company announced a partnership with AdaViv Inc., an agricultural company, to develop new AI-driven analytics to increase cannabis crop yields. On November 21, 2018, Liberty Health Sciences announced plans to open 5 additional dispensaries in Florida, bringing its dispensary count to 12 by the end of 2018.
- Market Cap: $ 312.4 Million
- Revenue: $ 3.2 Million (Q3 2018)
- 1-Month Total Return: +9.4%
- 1-Year Total Return: -16.7%
8. Aphria Inc. (TSX:APHA) – $ 12.68
Aphria is one of Canada’s largest cannabis producers by licensed capacity. The Company’s Leamington greenhouse facility provides them with the opportunity to be a scalable, low-cost producer of medical marijuana. APH sells medical marijuana and its derivatives through both retail sales and wholesale channels. Retail sales are sold primarily through the Company’s online store as well as telephone orders. Wholesale shipments are sold to other ACMPR Licensed Producers. With Part IV and Part V expansions completed, the Company has over 1,100,000 sq. ft. of greenhouse facilities, subject to Health Canada approvals, and anticipates production quantities of 110,000 kgs per year. The Company’s acquisition of Nuuvera Inc. on March 23, 2018 granted Aphria a license to export medical cannabis to Italy. Aphria began trading on the NYSE on November 2, 2018. On December 3, 2018, Hindenburg Research released a short-seller report accusing Aphria of purchasing Latin American assets at inflated prices for the benefit of company executives and insiders. Aphria has yet to release a comprehensive rebuttal against the allegations.
- Market Cap: $ 3.2 Billion
- Revenue: $ 21.7 Million (Q2 2019)
- 1-Month Total Return: +36.7%
- 1-Year Total Return: -18.3%
9. Nanosphere Health Sciences Inc (CSE:NSHS) – $ 0.44
NanoSphere Health Sciences, Inc. has developed the patent-protected NanoSphere Delivery System, which delivers active pharmaceutical ingredients into the bloodstream and target receptors with an increased absorption. The NanoSphere Delivery System has transdermal, intra-nasal, and intra-oral delivery methods. In addition to cannabis applications, the technology has uses in pharmaceuticals, over-the-counter medications, and other medical applications. The Company sells its product under its Evolve Formulas, available in over 100 dispensaries in Colorado, as well as in Arizona and California. On November 7, 2018, NanoSphere announced that its Evolve Formulas Transdermal NanoSerum CBD product has been well received in the Colorado market, having moved over 1,000 units in less than a month. On February 6, the Company’s share price increased 20% after receiving an order to export its patented Evolve Formulas CBD Hemp transdermal NanoSerum™ in Mexico.
- Market Cap: $ 41.8 Million
- Revenue: $ 0.49 Million (3 months ended September 30, 2018)
- 1-Month Total Return: +70.8%
- 1-Year Total Return: -32.8%
10. Sunniva Inc. (CSE:SNN) – $ 5.14
Sunniva is a vertically-integrated medical cannabis company operating in in Canada and California. The Company aims to become the lowest cost, highest-quality cannabis producer in the markets by building large-scale purpose-built Current Good Manufacturing Practice (CGMP) greenhouses. Standards set by the CGMP offer better quality assurance with pesticide-free cannabis products to provide better patient and doctor access to cannabis education, and source better therapeutic delivery devices. SNN estimates it will complete its licensed 324,000 sq. ft. greenhouse production facility in Riverside County, California by Q3 2018. In Canada, it intends to have a 688,000 sq. ft. facility estimated to produce about 200,000 kilograms of cannabis annually. On October 17, 2018, the Company signed an LOI to acquire a licensed cultivation and genetics facility in Northern California, providing Sunniva with current production capacity of 1,600 lbs per year. On February 13, Sunniva announced the completion of its $15 Million convertible debenture financing, which it intends use as additional working capital to enable the Company to meet the higher than anticipated near term sales demand.
- Market Cap: $ 187.2 Million
- Revenue: $ 3.7 Million (Q2 2018)
- 1-Month Total Return: +25.1%
- 1-Year Total Return: -52.9%
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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