Most cannabis stocks are close to their all-time highs.
The Scotts Miracle-Gro Company and Tilray are two companies that have exposure to the cannabis industry.
The cannabis industry and cannabis stocks have been disappointing for investors. The legal marijuana industry in North America was expected to be the next big thing. The industry is growing at a double-digit rate but has failed to live up to the hype and achieve the growth rates that were expected of it.
According to Grand View Research, the global legal cannabis market would grow at a compound annual growth rate of 34.6% over the next ten years.
In four years, the industry is projected to hit just $55 billion in sales, growing at a compounded annual growth rate of less than 15%.
Most cannabis stocks are close to their all-time highs. One of the benchmark trackers for the industry is down by almost all of its value from its peak.
The Canadian legal marijuana industry has been particularly bad for investors, who have lost a projected $131 billion on their investments. The legal Canadian cannabis industry has been plagued by high prices, poor quality product, and inconsistent regulations since legalization.
The situation in the U.S. isn't as bad as it is in other parts of the world, with more markets opening up in the future. Federal law prevents companies from transporting cannabis across state lines, so cannabis companies are bleeding red ink. In the first six months of the year, a group of US cannabis producers lost over half a billion dollars.
It is easy to see the potential for big things down the road despite the industry's growing pains. With cannabis stocks trading at absolute bargain basement prices, many for as little as 2x sales, there's never been a better time for investors to add cannabis stocks to their portfolios.
We will look at 10 of the best marijuana stocks to buy now according to some of the smartest money managers in the world. These are stocks with high exposure to the cannabis industry, which excludes some pharmaceutical companies and brewers for whom cannabis is just a small part of their business.
The hedge fund sentiment is used to rank cannabis stocks. We follow a group of hedge funds because their stock picks can deliver great returns.
The data for hedge funds is based on a group of 900 funds that filed 13Fs in the third quarter.
Tilray, Inc., Canopy Growth Corporation, and The Scotts Miracle-Gro Company are some of the well-known cannabis companies to buy now. Sundial Growers is a Canadian grower that has been buying up other Canadian cannabis assets.
The acquisition of Zenabis Group's cannabis business was completed in November and includes intellectual property rights to the company's brands and strains. The acquisition of Valens is expected to be completed in the first quarter of 2020. A 1,501% year-over-year increase in revenue was recorded by the company.
The number of top funds tracked by Insider Monkey has fallen from ten to just one. Israel Englander's Millennium Management has held a stake in the company since Q3 2020 and at the end of Q3 2022.
9 VILLAGE FARMS INTERNATIONAL, Inc.
VFF shares continued to slide in the second quarter as several hedge funds bought into the stock. Millennium Management cut its stake in the company by half during the third quarter. Jim Simons' Renaissance Technologies had the largest stake.
Village Farms International, Inc., a Canadian cannabis and produce grower grew sales by more than 50% and its gross profit by more than quadrupling in 2011. Its sales growth has slowed a bit this year, and its gross profit has gone down as costs have gone up.
Weakness in the company's production segment resulted in a 2% decline in the company's sales in the third quarter. Its cannabis sales increased by over a million dollars. The company's adjusted earnings before interest, taxes, depreciation, and amortization swung to a loss of $2.23 million during the quarter, compared to a gain of $6.93 million a year ago. The company thinks it will be more profitable in the future because of the decrease in brand launches.
OrganiGram is a subsidiary of OrganiGram Holding Inc.
Some of the usual suspects are also shareholders of OrganiGram. OGI positions were cut by most of the funds during the third quarter.
OrganiGram is a Canadian cannabis company that is focused on the medical cannabis space. Harvest Medicine bought several alternative healing centers that used cannabis to treat conditions like chronic pain and post-traumatic stress disorder.
OrganiGram's shares have been falling in lockstep with the broader industry, which makes them look very attractive given the company's strong results and growing market share in Canada
During the third quarter, the company grew revenue by 83%, posted positive adjusted EBITDA for the third quarter in a row, and grew its adjusted gross margin by 1100 basis points. It grew its market share from 7 to 8.2% over the course of the year.
Several funds added the stock to their portfolios during the third quarter. Kenneth Tropin's Graham Capital Management was among them. Between the end of October 2020 and the end of April 2021, 22nd Century Group, Inc.'s shares surged by over 500%, but have fallen by over 70% this year, lagging even the struggling cannabis industry.
22nd Century Group is an intriguing and unique stock in the cannabis space because of its ability to create powerful, customized cannabis strains that suit individual growers.
The company has achieved a lot thanks to its low-nicotine cigarettes, which it plans to launch in as many as 13 additional states over the next year. Its cannabis sales are getting off to a good start as well.
In the third quarter of the year, 22nd Century Group, Inc.'s sales increased by 148%. The company's cannabis sales have more than doubled in the past year, hitting $ 7.8 million.
Unlike most cannabis stocks, hedge fund ownership of Aurora Cannabis Inc. has remained stable in recent years, with many funds seemingly unwilling to bail on the stock, which has lost 98% of its value over the last five years The senior convertible notes were issued in the first quarter of the year.
The hedge fund ownership of the stock should be affected by Aurora Cannabis Inc.'s recent purchase of 40% of the remaining notes for just under $100 million. Over the past year, it has bought back more than half of its outstanding notes.
The goal for Aurora Cannabis is to achieve adjusted EBITDA profitability by the end of the year. Aurora lost more money in the third quarter than it made in sales, despite cutting costs.