The Bear has been brutal for the cannabis space. It has ravaged the portfolios of “True Believer” investors in the space over the past 18 months. But experts, analysts, and top investors are starting to position for the next leg of the longer-term structural bull market, which began several years ago, and is likely to define the space for at least another decade as the rolling process of legalization gradually unfolds.
This is exactly what happened for the alcohol industry almost a century ago.
There are many signs of bottoming action in cannabis stocks over recent weeks. And investors should be prepared to take advantage of the next leg higher. To aid in that process, we present several top ideas here for your consideration: Aphria Inc (NYSE:APHA), Tilray Inc (NASDAQ:TLRY), MCTC Holdings Inc aka Cannabis Global Inc. (OTCMKTS:MCTC), and Curaleaf Holdings Inc (OTCMKTS:CURLF).
Aphria Inc (NYSE:APHA) has been setting the standard for the low-cost production of safe, clean and pure pharmaceutical-grade cannabis at scale, grown in the most natural conditions possible.
The stock is probably the best value opportunity based on strict, traditional fundamental analytics in the space, trading at about 1.7x sales with a strong balance sheet.
The Company’s portfolio of brands is grounded in expertly-researched consumer insights designed to meet the needs of every consumer segment. “Rooted in our founders’ multi-generational expertise in commercial agriculture, Aphria drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion, with a presence in more than 10 countries across 5 continents.”
The company touts itself as one of Canada’s lowest cost producers, produces, supplies and sells medical cannabis. The company is truly powered by sunlight, allowing for the most natural growing conditions available. “We are committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders. We are the first public licensed producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters.”
Aphria Inc (NYSE:APHA) pulled in sales of $120.2M in its last reported quarterly financials, representing top line growth of 454.5%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($497.7M against $152.5M).
Tilray Inc (NASDAQ:TLRY) has a strong current balance sheet, with cash levels exceeding current liabilities ($96.8M against $92.4M). So the problems aren’t getting worse. But it was pinned during the bear by some rough debt servicing costs. Nonetheless, this is an innovator in the cannabis space on the distribution side, with access to international markets.
The company offers its products in Argentina, Australia, Canada, Chile, Croatia, Cyprus, the Czech Republic, Germany, New Zealand, and South Africa. Tilray, Inc. was incorporated in 2018 and is headquartered in Nanaimo, Canada.
One of its key subsidiaries is High Park, which was launched to produce and distribute world-class cannabis brands and products for the Canadian market. Based in Toronto and led by a team with deep experience in cannabis and global consumer brands, High Park has secured the exclusive rights to produce and distribute a broad-based portfolio of cannabis brands and products in Canada, subject to applicable laws and regulations.
In addition, High Park has developed new brands and products for the Canadian market. Upon the coming into force of federal legalization of cannabis for adult-use and corresponding provincial legislation, High Park anticipates fulfilling adult-use supply agreements and purchase orders in Quebec, Ontario, British Columbia, Manitoba, Nova Scotia, Prince Edward Island, Northwest Territories and Yukon on October 17, 2018.
Tilray Inc (NASDAQ:TLRY) shares have started to turn higher after sinking all the way from $300 to $2.50 in about 18 months.
MCTC Holdings Inc (OTCMKTS:MCTC), now doing business as Cannabis Global, Inc. (MCTC), is a more speculative play, but one that seems destined to make a huge impact, so we wouldn’t let the thin trading deter you. This company is for real, with one of the most explosive IP portfolios in the sector.
The company has developed unique and defensible solutions to deliver superior isolation, infusion, and bio-enhancement of both CBD and THC for infused edibles and beverages. In essence, if the future of the cannabis market isn’t smoking, then MCTC might very well be the best positioned company in the space that no one has really heard about.
The company claims to have methods that can simultaneously lower cost and raise quality (bioavailability) for infusing CBD and/or THC into edibles, coffees, or sweeteners.
Given the accelerating deal flow we are seeing for this technology, the California cannabis market would seem to agree. One clear example of that substantive value is its recent deal with BudCars, the top emerging cannabis delivery outfit that just announced an expansion into the LA regional market. BudCars is stacking up massive growth and just signed a deal to license Cannabis Global’s proprietary tech for edibles distribution to its core customer base. BudCars is already on pace to do better than $30 million in annualized 2020 sales.
Cannabis Global (MCTC) has recently filed six patents on cannabinoid extraction technologies and delivery systems. Management is currently working with patent counsel to protect various other technologies it has developed or is currently developing, including its programs pertaining to cannabinoid glycosides, polymeric cannabinoid nanoparticles and nanofibers, and its hemp extract-based alcohol replacement technologies.
The company also just announced that it had a breakthrough in its research on THC-V, a “varin” cannabinoid that holds promise as a weight-less supplement. The stock could be primed for a rip if the crowd finds it at this point.
Curaleaf Holdings Inc (OTCMKTS:CURLF) is one of the biggest players in terms of US east coast exposure as a primary footprint. Shares recently touched cycle bottom in the $2.50/share area, and it certainly looks like a low that can stick at this point. The stock just broke out above its 50-day simple moving average, with its next challenge lying in wait up around the $5 level.
Curaleaf operates as an integrated medical and wellness cannabis operator in the United States. The Company is the parent of Curaleaf, Inc., a leading vertically integrated cannabis operator in the United States. Headquartered in Wakefield, Massachusetts, Curaleaf, Inc. has a presence in 12 states.
Curaleaf Inc.’s Florida operations were the first in the cannabis industry to receive the Safe Quality Food certification under the Global Food Safety Initiative, setting a new standard of excellence.
It cultivates, processes, markets, and/or dispenses a range of cannabis products in various operating markets, including flower, pre-rolls and flower pods, dry-herb vaporizer cartridges, concentrates for vaporizing, concentrates for dabbing, tinctures, lozenges, capsules, and edibles.
The company also provides non-cannabis services to licensed cannabis operators in the areas of cultivation, extraction and production, and retail operations.