5 Sizzling Marijuana Stocks to Buy Now Priced Under $10

Companies and Brands

Published: May 25, 2019 9:15 am

Last Updated: January 6, 2020 4:21 am

It was going to happen. Even though many of the top marijuana stocks based in Canada get coverage there, there had been little major Wall Street coverage here in the United States. That has started to change, as many analysts are not only covering the sector, but they have Buy ratings on some of the hottest companies.

Needless to say, the marijuana industry now is sort of like the beginning of the dot-com era in the mid-1990s. It is entirely possible that some of the companies in the mix now could be long-gone in five or 10 years. It is also very possible that some of the top companies could be huge home runs for aggressive investors.

Every week here at 24/7 Wall St. we cover stocks priced under $10. This week, in a special report, we cover cheap marijuana stocks that also have Buy ratings from top analysts. These five picks look like solid players in the industry.

Aurora Cannabis

This company has made a string of acquisitions to grow the scale of its overall business and saw industry-leading sales in the first quarter. Aurora Cannabis Inc. (NYSE: ACB) produces and distributes medical cannabis products. It is vertically integrated and horizontally diversified across various segments of the cannabis value chain, from facility engineering and design to cannabis breeding, genetics research, production, derivatives, high value-add product development, home cultivation, wholesale and retail distribution.

The company’s products consist of dried cannabis and cannabis oil, CanniMed vegan capsules and hemp products, as well as sells vaporizers, consumable vaporizer accessories and herb mills for using herbal cannabis products. It also operates CanvasRX, a network of cannabis counseling and outreach centers, and it provides cannabis analytical product testing services.

Jefferies has a Buy rating and recently raised the price target from C$12 to a C$14, or about US$10.36. The shares traded at $8.31 apiece in New York on Friday’s close.

CannTrust

This could be an off-the-radar play for investors looking for a marijuana play with lower name recognition. CannTrust Holdings Inc. (NYSE: CTST) produces and distributes pharmaceutical-grade medical cannabis products in Canada. It sells dried cannabis and oil extractions to clients based on the medication documentation provided by health care practitioners. The company has a partnership with Gold Coast University Hospital.

CannTrust also focuses on developing nanotechnology to create new products in the medical, recreational, beauty, wellness and pet markets. In addition, the company recently completed a successful secondary offering, and management noted in late April that it expects to report strong first-quarter results.

Merrill Lynch started coverage on the shares Friday with a Buy rating and an $11 price target. The shares closed at $5.72 on Friday.

Hexo

This is another popular stock in the fast-expanding marijuana/cannabis segment. Hexo Corp (NYSE: HEXO) is a diversified company, selling a portfolio of cannabis and related products. The company is based in Quebec, where it is a preferred supplier to the province’s provincial cannabis purchaser. The company also has national distribution, with plans to expand internationally.

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Through its hub and spoke business strategy, Hexo partners with Fortune 500 companies, bringing its brand value, cannabinoid isolation technology, licensed infrastructure and regulatory expertise to established companies, leveraging their distribution networks and capacity. As one of the largest licensed cannabis companies in Canada, Hexo operates with 1.8 million square feet of facilities in Ontario and Quebec, and a foothold in Greece to establish a eurozone processing, production and distribution center. The company serves the Canadian adult-use and medical markets.

Merrill Lynch recently started Hexo coverage with a Buy rating and a $10 price target. On Friday, shares were last seen changing hands at $6.76 apiece.

New Age Beverages

The marijuana industry also includes infused products, and this is a solid play. New Age Beverages Corp. (NASDAQ: NBEV) is a beverage company that engages in the development, marketing, sales and distribution of ready-to-drink beverages. Its brand includes Coco Libre, Xing tea, Xing Energy, Aspen Pure, Bucha Live Kombucha, Mellow Mood and One Drop.

At the end of 2018, the company launched its Noni+Collagen product and announced that within its first two months of sales it generated over $4 million in revenue in initial test markets. The company’s Morinda division created the product and currently offers it in 50-milliliter glass bottle shots, positioned as a once-daily use, sold in three 10-packs for a 30-day supply. In addition to this new product, New Age announced in January an agreement to sell Marley branded cannabis-infused beverages.

Alliance Global’s Buy rating comes with an $8 price target. The Wall Street consensus target is even higher, at $8.85. The stock traded most recently at $5.44 a share.

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Green Organic Dutchman

Aggressive investors may want to take a swing at this over-the-counter traded micro-cap play. Green Organic Dutchman operates as a cannabinoid-based research and development company in Canada. It produces organic cannabis products, including organic dried cannabis, cannabis oils and edibles, fresh cannabis and seeds for medical applications.

In June of 2018, the company purchased 49.18% interest in Epican, a fully integrated Jamaican cannabis company with cultivation, extraction, manufacturing and retail distribution licenses. Significant progress has been made toward expanding cultivation, opening additional retail dispensaries and establishing a leadership position in Jamaica’s robust medical cannabis market.

Given the small size of this company, and the nature of the industry to date, it wouldn’t be outside the realm of possibility for this to be a takeover target.

Jefferies has a Buy rating and a C$6.10 Canadian target (about US$4.64). The OTC shares ended the week at $3.00 apiece.

With major brokerage firms starting coverage on the marijuana industry, more and more investors are adding the stocks to portfolios. While legalization for recreational and medical use has sped up in recent years, there remains the taboo of marijuana as a drug that is still illegal in the United States on a federal level and in many states.

The fact of the matter is that we should see an increasing number of states legalizing recreational use, as the consumer demand is there, as is the potential for huge tax windfalls.