It was going to happen, and even though many of the top cannabis stocks are based in Canada and get coverage there, until recently, there has been little major Wall Street coverage in the United States. However, that is changing and changing fast, and needless to say, the marijuana industry now is sort of like the beginning of the dot-com era in the mid-1990s. With that in mind, it is entirely possible that some of the companies that are in the mix now could be long gone five or 10 years from now.
Merrill Lynch has coverage on the industry, and when a major Wall Street firm like Merrill starts and maintains coverage, it pretty much legitimizes things for good. The analysts remain very positive on five cannabis companies, rating their stocks at Buy, and said they said this in a recent report:
Canada’s cannabis market is coming to life after a tepid start, and we expect strong growth to sustain ahead. Despite attractive trends, however, Wall Street expectations on an absolute basis seem aggressive based on current market size. Canada may need to add at least 400 stores in one year just to get close to expectations.
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.
Merrill has a $10 price target on the shares, and no Wall Street consensus target was posted, even though other companies cover the stock. Shares were last seen trading at $7.54 apiece.
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.
The Merrill price target on the stock is $8. The stock ended last week trading at $4.94 per share.