Cannabis investors have been burnt by oversupply and a proliferation of pretenders over the past two years. But the sun is finally starting to come back out from behind those clouds over the past month, with many survivors starting to show signs of thriving in the post-purge world that now defines the space.
The pandemic has both helped and hurt. But the process of naturally thinning the herd has been a powerful factor in driving fresh momentum – the wheat has finally been separated from the chaff.
The remaining “winners” now can perhaps look forward to reaping the rewards of the powerful structural growth trend analysts still anticipate defining the future of this space over coming years as the legalization and mainstreaming trends remain in place. That offers up a very strong investment thesis for new money looking for high-growth opportunities in a washed out sector.
With that in mind, we present a few of the most interesting names for consideration: GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH), Canopy Growth Corp (NYSE:CGC), MCTC Holdings Inc (OTCMKTS:MCTC) aka Cannabis Global Inc. (OTCMKTS:MCTC), and Trulieve Cannabis Corp (OTCMKTS:TCNNF).
GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) just hit the wires with Q1 results after the market closed on Monday. Sales came in at $120.6 million, more than triple the numbers dropped in the year-ago quarter, blowing out analyst estimates (consensus $109.4 million).
The big driver was Epidiolex, an FDA approved CBD treatment for refractory childhood epilepsies, as well as for the treatment of Dravet syndrome, Lennox-Gastaut syndrome, tuberous sclerosis complex, and infantile spasms.
Net product sales for the drug totaled $116.1 million in Q1, with $106.1 million of this amount generated in the U.S.
GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) bills itself as a biopharmaceutical company that engages in discovering, developing, and commercializing cannabinoid prescription medicines using botanical extracts derived from the Cannabis plant.
The company operates through three segments: Commercial, Sativex Research and Development, and Pipeline Research and Development. Its lead product is Epidiolex, an FDA approved treatment of refractory childhood epilepsies, as well as for the treatment of Dravet syndrome, Lennox-Gastaut syndrome, tuberous sclerosis complex, and infantile spasms.
The company also develops and markets Sativex, an oromucosal spray for the treatment of spasticity due to multiple sclerosis. In addition, it develops various product candidates, which are in Phase I and II clinical development for the treatment of glioma, neonatal hypoxic-ischemic encephalopathy, adult epilepsy, and schizophrenia.
The context for this announcement is a strong bid, with shares acting well over the past five days. Shares have powered higher over the past month, rallying roughly 11% in that time on strong overall action.
GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) has been acting well over the past five days. Shares have powered higher over the past month, rallying roughly 11% in that time on strong overall action.
Canopy Growth Corp (NYSE:CGC) is one of the biggest and most geographically diversified players in the cannabis space, with operations in 12 countries across five continents. The company engages in growing, possession, and sale of medical cannabis in Canada. Its products include dried flowers, oils and concentrates, softgel capsules, and hemps.
It’s perhaps the biggest overall name in the space when it comes to a combination of producing and investing in the space, so it has to be near the top of any measure as far as benefitting from a shift whereby full-scale legalization in the US market is concerned.
According to its own materials, the company offers its products under the Tweed, Black Label, Spectrum Cannabis, DNA Genetics, Leafs By Snoop, Bedrocan Canada, CraftGrow, and Foria brand names. It also offers its products through Tweed Main Street, a single online platform that enables registered patients to purchase medicinal cannabis from various producers across various brands.
One of its most important divestitures and strategic interests is Canopy Rivers Inc., a unique investment and operating platform structured to pursue investment opportunities in the emerging global cannabis sector. The company works collaboratively with Canopy Growth to identify strategic counterparties seeking financial and/or operating support.
CGC has had a rough past week of trading action, with shares sinking something like -12% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -8%.
Canopy Growth Corp (NYSE:CGC) generated sales of $123.8M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 61.5% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($2.3B against $418.3M).
MCTC Holdings Inc (OTCMKTS:MCTC), now doing business as Cannabis Global, Inc. (MCTC), is interesting as a more speculative play. The company is one of the very few plays in the cannabis space that is building vertically from a base driven by genuine IP. MCTC has a number of strong patents in process at the USPTO and looks set to become a leading play on the red hot edibles infusion theme.
That’s interesting enough. But the story just got more interesting because the company’s verticalization theme is continuing to build and now includes a serious play in the explosive California cannabis delivery marketplace with its announcement this morning of an LOI with Whisper Weed Delivery of Los Angeles, a leading California cannabis delivery services provider, wherein Cannabis Global will provide management services in exchange for fees equivalent to 51% of the profits derived from Whisper Weed’s cannabis delivery services throughout the entire greater Los Angeles regional marketplace.
“We continue to verticalize operations from an IP-driven base, stacking a core technology and R&D edge under growing manufacturing operations, and now we have added an essential piece of that puzzle: an established leadership position in cannabis home delivery in the largest municipal cannabis market in the world,” commented, Arman Tabatabaei, CEO of Cannabis Global. “Whisper Weed is cash-flow positive, profitable, and growing rapidly in terms of volume and end-market footprint. Our aggressive growth strategy continues to move forward ahead of schedule. And this expansion into the rapidly growing California cannabis delivery space is an integral part of that plan.”
We would also note that the cannabis delivery space, itself, is a $10 billion industry already, and growing by leaps and bounds due to embedded structural factors as well as the COVID-19 pandemic, and its stay-at-home impact.
This news comes on the heels of a deal with BudCars, another juggernaut in the California cannabis delivery space.
In addition, MCTC Holdings Inc (OTCMKTS:MCTC) also just announced that it is starting to commercialize breakthrough research on THC-V, a “Varin” cannabinoid with the potential to work as a weight-loss supplement. The company has patents pending there as well, and may soon have a virtual monopoly on that market.
Keep this one on the radar.
Trulieve Cannabis Corp (OTCMKTS:TCNNF) is one of the best performing stocks in the cannabis space over the past couple months, with shares more than doubling since mid-March on strong action. The stock is now trading well above its major moving averages and sits on gains over the past 18 months – that’s a rare trait for a pot stock these days.
The company engages in the cultivation, possession, distribution, and sale of medical cannabis in the United States.
It offers a suite of Trulieve branded products with approximately 125 SKUs, including nasal sprays, capsules, concentrates, syringes, and cannabis flower in tamper-proof containers for vaporizers, topical creams, tinctures, and vape cartridges.
Trulieve Cannabis Corp (OTCMKTS:TCNNF) distributes its products to Trulieve branded stores (dispensaries) in Florida, as well as takes orders online and by phone for delivery. As of November 20, 2018, the company operated 21 dispensaries. Trulieve Cannabis Corp. is headquartered in Quincy, Florida.
The stock has been acting well over recent days, up something like 10% in that time.
Trulieve Cannabis Corp (OTCMKTS:TCNNF) managed to rope in revenues totaling $105.2M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 121.6%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($119.1M against $73.6M).