The meteoric rise in cannabis stocks has minted many new millionaires. I’m not just talking about the stakeholders in large producers like Bruce Linton and Terry Booth. No, cannabis has been an electric source of growth for many fresh-faced investors in the latter half of this decade.
Millennials were known for their fondness of the cannabis trade early on. A recent Canada MONITOR study from Kantar Consulting revealed that only 13% of Canadians surveyed reported frequent cannabis use. Half of those respondents were millennials. The dive into cannabis equities went beyond market savvy for young investors but also spoke to their consumer preferences.
It has been nearly a year since recreational legalization, and cannabis investors have encountered a period of volatility since the middle of spring.
The top cannabis stocks do not carry the explosive potential that they did immediately following the 2015 federal election. Investors should expect cannabis to behave more like other sectors as we look ahead to the next decade. That means the market will be reacting more to immediate results that long-term growth potential. That does not mean that you should eschew investing in the sector if you are looking for growth.
Canopy Growth (TSX:WEED)(NYSE:CGC) was my top stock for September. The stock has dropped 1.4% in 2019 as of close on September 10. Shares spent most of August in technically oversold territory, but we have seen an uptick so far this month.
The company is set to launch a flurry of new products in December. This will come after the legalization of cannabis edibles in October, a landmark move that will open the door for a lucrative sub-sector. Canopy is well prepared for this rollout. It boasts a large product pipelines that will reportedly include vape pens, chocolates, and beverages. This is where its partnership with Constellation Brands can pay off in a big way.
Its last quarterly report indicated that Canopy is still years away from profitability, but it looks poised to finish 2019 with some promising offerings that will give it a leg up in the cannabis 2.0 market.
In late August, I’d recommended Aurora Cannabis (TSX:ACB)(NYSE:ACB) stock as a bargain buy for investors. Shares of Aurora have climbed 21.6% in 2019, although the stock has dropped 21% over the past three months.
At the time of this writing, Aurora has yet to release its fourth-quarter fiscal 2019 results. Aurora projected growth across all business segments ahead of the quarterly report, and production is expected to be between 25,000 kilograms and 30,000kg. The company appears to be much closer to profitability than Canopy at this juncture.
Aurora stock sank into technically oversold territory in late July and early August but has since remained at neutral levels. I like Aurora priced below the $9 mark in early September. It has yet to bag the big partnership onlookers have been craving, but production and revenue growth have been on the mark.
- Half of Canadian Millennials Are Making This TFSA Mistake
- TFSA Pension: How to Add $307 in Tax-Free Monthly Income Without Losing OAS Benefits
- Canadians: Are You Making These 3 Massive Retirement Mistakes?
- TFSA Users: 40% of You Are Making This Huge Mistake
- Top stocks for 2019
- Two New Stock Picks Every Month!
Fool contributor Ambrose O'Callaghan owns shares of Aurora Cannabis.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019