Consumer Products

Why the November Elections Could Be Huge for Top Marijuana Stocks

Here are three stocks with Buy-equivalent ratings that trade on U.S. exchanges for investors to consider.

Aphria

This was one of the few marijuana stocks that weren’t losing money. Aphria Inc. (NASDAQ: APHA) engages in the production and supply of medical cannabis. It operates through the following segments.

The Cannabis Operations segment produces, distributes and sells both medical and adult-use cannabis. The Distribution Operations segment’s operations are carried out through its wholly owned subsidiaries: ABP, FL Group and CC Pharma. The Business Under Development segment includes operations in which the firm has not received final licensing or has not commenced commercial sales from operations.

As of late last year, it had $500 million Canadian on the balance sheet and an additional $100 million Canadian raised from a strategic investor. On Thursday, Aphria posted $98.8 million net loss in the fourth quarter, missing analyst estimates. The company said its loss included a $64 million noncash asset impairment expense largely related to the COVID-19 pandemic at some of its international businesses. Despite the hit the shares took, both CIBC and PI Financial raised their price targets on the company after the report.

Cantor Fitzgerald has an Overweight rating on the shares and just raised its price target from $10.50 to $11.00. No Wall Street consensus target was posted. Aphria stock closed Thursday’s trading at $4.92 a share.

Aurora Cannabis

This company has made a string of acquisitions to grow the scale of its overall business. 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.

Cantor Fitzgerald has a $21 U.S. price target, but no consensus target was posted. Aurora Cannabis stock closed at $10.54 on Thursday.

Cronus

This global cannabis company had a major international company take a large position late in 2018. Cronus Group Inc. (NASDAQ: CRON) was founded in 2012 and is based in Ontario, Canada. It has a presence across five continents, and its principal activities are the production and sale of cannabis and cannabis-derived products in federally legal jurisdictions.

Back in December of 2018, Altria agreed to buy a 45% stake in the company for about $1.8 billion, a sign of the new world in which the tobacco company must compete. This strategic partnership provides Cronos with additional financial resources, product development and commercialization capabilities, as well as deep regulatory expertise, to better position the company to compete, scale and lead the rapidly growing global cannabis industry. The stake also gives Altria the option to increase to full ownership if it so chooses down the road.

The Outperform rating from Raymond James comes with a gigantic $13.52 price target. Again, no consensus target was posted. Cronus Group stock last seen trading at $6.65 per share.


The bottom line for investors is that when the Pandora’s box for the industry and recreational sales was opened, it appears most likely it will never be shut again. While the huge dramatic moves some of the top stocks made a few years back when Canadian legalization was at the forefront may be history, there is good reason to add some of the top stocks in the industry to aggressive growth portfolios.