The 7 Best Cannabis Stocks To Buy For Long-Term Growth
As the winds of change sweep across the United States, the once-taboo cannabis industry is steadily gaining momentum. With growing acceptance from regulators and consumers, the marijuana sphere has the potential to inject robust long-term growth into your investment portfolio – especially with this list of the best cannabis stocks to own. 2022 has been an incredibly difficult year for the sector, marked by inflation, overproduction and capital constraints, leading to falling stock prices. Additionally, ongoing discussions of federal legalization and piecemeal changes at the state level have affected volatility in the sector. Nevertheless, 37 states have legalized marijuana for medical purposes, while 21 have approved recreational use.
Research firm MarketsandMarkets estimates that the global cannabis market was valued at $22.5 billion in 2021, and could skyrocket to $82.3 billion by 2027 at a 2022 CAGR of 24.3%. to 2026. The industry is at the epicenter of a global whirlwind of legalization, presenting an attractive potential long-term prospect for forward-looking investors.
|IIRP||Innovative industrial properties||$75.84|
|GM||ETFMG Alternative Harvest ETF||$3.52|
curafeuille (OTCMKTS:CURVE) is one of the largest multi-state cannabis operators (MSOs) in the United States. It is present in 21 US states, which positions it incredibly well in a legalization scenario. However, its stock price growth has been relatively choppy due to premature hopes of federal legalization and supply-demand imbalances.
Like its peers, its business was hit hard last year due to an unfavorable macroeconomic environment. Nonetheless, it has done relatively well in terms of cost control, posting an adjusted EBITDA margin of over 20% in its latest quarter. Additionally, it has several products in its pipeline that could significantly boost revenue growth in the coming quarters. According to my fellow InvestorPlace colleague, Faisal Humayun, the company has 15 new products in its active pipeline, ready to launch.
Tilray (NASDAQ:TLRY) is one of the largest cannabis companies in the world by market share. Additionally, it is also one of the most diverse players in the space, aiming to become a consumer staples and marijuana consumer products company. In addition, the Canadian company has deployed its tentacles in key markets such as the United States and Europe to diversify its revenue base.
Tilray has been remarkably successful in expanding its distribution and cultivation, processing and manufacturing facilities in several countries. Its robust distribution structure could potentially be massive in the event of federal cannabis legalization in the United States. Additionally, it has a strong beer and spirits business in the United States and a substantial stake in a popular local cannabis retailer called MedMen Companies. As we move forward, Tilray remains in a better position to move forward with its expansion plans with only $152 million in long-term debt, with a cash balance of $433 million.
Chronos Group (CRON)
Chronos Group (NASDAQ:CRON) is a Canadian cannabinoid company involved in the development, technology and research of cannabis-based products. Its largest markets are in Canada and Israel, while operating smaller operations in Germany, the United States and Australia. One of its main competitive advantages is its strong position in the Israeli cannabis market. Israel imported over 33,000 kg of medical cannabis in 2022, about 11,000 kg more than in 2021. Additionally, with favorable legislation, expect the industry to grow aggressively, at benefit of the Cronos group.
From a financial standpoint, Cronos has done well to build up its $877 million cash war chest, which comfortably eclipses its tiny debt balance. Also, last year, its net loss shrank by more than 50% compared to 2021, an incredible feat given the market conditions.
Innovative industrial properties (IIRP)
Innovative industrial properties (NYSE:IIRP) is a specialized real estate investment trust (REITs) jibuse on the properties of cannabis. IIPR has 110 properties in its portfolio spanning 19 states. To put things into perspective, there was only one tenant in 2016. Additionally, it grew its average operating funds by 66%, compared to the industry median of 2.1%.
IIPR prioritizes long-term leases lasting at least 15-20 years, committing billions of dollars to expanding its real estate footprint. As a result, its free cash flow growth through leverage reached 41.6%. In addition, investing in the REIT comes with an annual dividend payment of $7.20. Additionally, it pays 9.5%, with five consecutive years of payout growth. All the while, its shares are trading at nine times year-over-year cash flow estimates, about 21.6% below the industry median.
ETFMG Alternative Harvest ETF (GM)
Perhaps one of the best ways to invest in a risky market over the long term is with an exchange-traded fund. ETFMG Alternative Harvest (NYSEARC:GM) is one of the best ETFs in the industry, offering a wide range of low-cost cannabis stocks. It includes most of the stocks discussed in the article and 34 more. MJ ETF tracks Prime Alternative Harvest, which effectively measures the performance of some of the best medical and recreational marijuana stocks. Therefore, with an expense ratio of 0.75% and a formidable forward dividend yield of 7.5%, MJ ETF stock is worth staking at its current price.
Trulieve Cannabis (TCNNF)
Trulieve Cannabis (OTCMKTS:TCNNF) is arguably one of the most successful MSOs in the United States. It has over 7,600 employees spread across its robust vertically integrated operation. By the end of 2022, it had 181 dispensaries and 21 cultivation facilities in 11 states.
The company wrapped up 2022 with aplomb, generating $1.2 billion in sales, 32% more than a year earlier. Additionally, it generated non-GAAP adjusted EBITDA of $400 million, up $15 million from a year earlier, representing about 32% of its sales. Trulieve surpassed $1.2 billion in sales in seven years, a milestone and a testament to the execution of its leadership. Despite its good track record of growth on both lines, TCNNF stock is trading at less than one-time sales over the last twelve months, around 77.5% below the industry average.
Sundial producers (SNDL)
Sundial producers (NASDAQ:SNDL) has become a major cannabis player in Canada through strategic acquisitions over the past two years. Its meme stock status in 2021 helped the company close the year with a 520% year-over-year increase in its cash balance to $510 million. Hence, he embarked on a buying spree to diversify and grow his revenue base in the North American region.
Two of its biggest acquisitions were major alcohol retailer Alcanna for $255 million and biotech company Valens for $138 million. The two acquisitions helped boost its year-over-year revenue growth by 713% to $358 million. Additionally, the company has invested heavily in vertical farming to reduce production costs and improve margins. It still has $235.7 million left, indicating more inorganic growth.
As of the date of publication, Muslim Farooque had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.