cannabis market is a fast-growing industry, expected to exceed $145 billion by
2025, with two-thirds of that total in the medical-use segment. To give some
idea of the magnitude of the industry’s growth, the global cannabis market was
estimated at $11 billion in 2017.
Any industry showing that sort of growth is
bound to attract investors. Except…
Except that you want to learn more about the
companies before putting up your money.
TipRanks has the online Stock Comparison Tool you need. You’re looking for cannabis stocks – no problem. You can put them side-by-side in the Stock Comparer, with their vital stats and all. Like this:
you can see that the Stock Comparer offers more than just a comparison of
cannabis stocks. With eight built-in topics, and a search engine to comb
TipRanks’ database, the comparer can show you any company you want to see. In
our example, we’re looking at the four largest cannabis companies, by market
Asking the Right Questions
is presented in a clear, easy to read chart. Is GW Pharma too expensive for
you? No problem – Aurora Cannabis is available, for only $11 Canadian on the
Toronto Stock Exchange.
Do you want
to buy in to the largest cannabis company? That would be Canopy Growth, with a
market cap of almost $20 billion, also in Canadian currency.
worried that cannabis is just a fad? Well, all four of these stocks are showing
significant growth over the past year, ranging from 32% to 136%.
which stock will show the strongest growth going forward? Here you have to rely
on the analysts – the three right-hand columns show you how the analysts rate
each stock, and the average price target. And that percentage under the price
target? That’s the upside – the room for growth between the current share price
and average price target. Among these stocks, Tilray shows the best value, with
a 55% upside.
But what about that Hold? That’s the Analyst Consensus, a composite rating derived from all of the analyst opinions on a particular stock. Wall Street’s analysts are worried about Tilray, and are not recommending it as a buy – but the high upside makes it a classic example of risk and reward in the market.
Sense of the Answers
Now that you
have the information from the stock comparer, it’s time to decide which
cannabis company to go with. If you’re looking for a safe play, GW Pharma is
probably the way to go. It’s a traditional pharmaceutical company, on this list
because its founders had the foresight to start working with cannabis derivatives
and extracts back in 1998. The risk play is Tilray, a cannabis growing company
based in Canada and positioning itself as a supplier for the medical market.
look closer at the three buy-rated stocks.
Aurora Cannabis (TSE:ACB – Research Report)
Edmonton, in the Canadian province of Alberta, and capable of producing up to
500,000 kilograms of cannabis products annually, Aurora is a major supplier to
the legal marijuana industry.
positioning itself for success in the international cannabis markets. On April
4, Jefferies analyst Owen Bennett (Track Record & Ratings) recently noted ACB’s acquisition
of cultivation rights in Germany: “German press reporting today preliminary
results of the German domestic cultivation tender process, with Aurora
apparently receiving 5 of the 13 lots… if true this decision adds to the
credibility of Aurora’s medical operations and positions it well for entrance
to future international markets.”
recently, Cowen’s five-star analyst Vivien Azer (Track Record & Ratings) pointed out that, while the
cannabis industry generally is dealing with issues of tight supply and modest
growth, Aurora is one of the companies likely to outperform and merit a ‘buy’
ACB keeps a ‘Strong Buy’ consensus rating, based on 3 buys and 1 hold given
over the past three months. Shares sell for $11.83 Canadian; with an average
price target of C$12.83, this gives ACB an upside potential of 8%.
Canopy Growth Corporation (TSE:WEED – Research Report)
mentioned above, Canopy is the largest of the Canadian cannabis producers, with
a market cap of nearly $20 billion Canadian dollars. Canopy’s size and
nationwide production and distribution network attracted the attention of
Constellation Brands (STZ), the US’ third largest beer importer. The two
companies completed an agreement in November 2018, whereby Constellation bought
a 38% stake in Canopy for $3.8 billion in US currency, with plans to create
cannabis infused beverages.
like Aurora, recently received a ‘buy’ rating from Vivien Azer, which comes
just two months after Canaccord’s Matt Bottomley (Track Record & Ratings) gave WEED a buy rating with a C$70
price target. Bottomley’s target suggest room for a 24% upside.
Making the bearish case on Canopy is Seaport Global’s Brett Hundley (Track Record & Ratings). Hundely says, “It is prudent to be somewhat conservative related to store rollouts this spring along with the development of the nationwide edibles/beverages market later this year.”
analyst consensus is a ‘Moderate Buy,’ based on 3 buy ratings and 4 holds. The
stock shows plenty of reward potential, however, with a 20% upside and a C$67
average price target compared to the C$56 price target.
GW Pharmaceuticals (GWPH – Research Report)
1998, GW was an early adopter when it comes to medical cannabis. The company
has a cannabidiol-derived drug on the market, Sativex, which is approved in the
UK and Canada for treatment of multiple sclerosis.
years, GW Pharma has been conducting research into use of cannabidiol-based
drugs as a treatment for resistant childhood epilepsy. The company may have
gotten a boost recently, when its competitor Zogenix (ZGNX) hit a bureaucratic setback with the FDA.
point got the attention of Morgan Stanley analyst David Lebovitz (Track Record & Ratings). He said, “Expect shares of GW
Pharmaceuticals (GWPH) to be up at least 5-10% following news that Zogenix
(ZGNX) was issued a Refusal to File letter for Fintepla by the FDA. The RTF
delays a potential competing product for the treatment of seizures associated
with Dravet Syndrome.”
cutthroat world, and sometimes one company’s setback may be another’s
recent buy ratings under its belt, GW Pharma maintains a ‘Moderate Buy’ on the
analyst consensus. The stock’s $167 share price and $183 average price target
yield a 9% upside potential.
the Research Reports on the Stocks in this Article:
All of this
is just a sample of TipRanks’ Stock Comparer. The comparison tool offers you the
flexibility to line up your investment opportunities side by side, and compare
apples to apples. You can find the Stock Comparison tool on our website, under
the ‘Research Tools’ dropdown menu at the top right of the homepage. Start comparing your favorite stocks
Source: TipRanks Blog