According to Data Bridge Market Research, the global medical cannabis market is projected to grow more than 20% annually through 2027. With the change in the new U.S administration, the hope of cannabis legalization in certain states has driven stock prices to record highs. As more states in the U.S and other countries are beginning to recognize the potential benefits of medical cannabis and are allowing the legal use and sale of cannabis products, one could assume this industry to grow exponentially in the coming years.
Listed below are two cannabis stocks that have shown great progress in the market and are stocks that investors should keep an eye on.
Sundial Growers (SNDL)
Sundial Growers (SNDL) is a pharmaceutical company headquartered in Alberta, Canada, and is listed on the NASDAQ. The company engages in the legal production and distribution of cannabis products, ornamental plants, and herbs.
Over the last couple of months, Sundial stock price has risen along with other cannabis-related stocks as the new Administration sworn in. Sundial’s opening share price on January 4 began with $0.48, and the price jumped up to $3.96 as of February 11, and has now fallen back to below $2 in March and is trading at $1.39 as of March 10.
Sundial also announced in December 2020 that it had become debt-free while many other cannabis companies are struggling with debt burdens. This demonstrates a remarkable improvement from last year. According to analysts, Sundial’s recent investment in Indiva will help the company grow in the coming years, and the exercising of $98.3 million warrants in February has helped the company raise more than $680 million.
Sundial’s year-end earnings report is expected to be released on March 17 which will be crucial for investors who are wondering if this is a good time to invest in the stock.
Curaleaf Holdings (CURLF)
Curaleaf Holdings Inc. (CURLF) is an American company listed on the Canadian Stock Exchange, and US investors can invest in the company easily on the OTC market. Curaleaf Holdings engages in the production and distribution of cannabis products and operates 101 dispensaries, 23 cultivation sites, and 30 processing sites in the U.S as well.
The company reported $626.6 million in revenue for 2020 which is up 183.5% from 2019. Over the last three quarters, the company’s revenue of $396.4 million has more than doubled compared to the revenue of $145.6 million from the corresponding period the previous year. The stock has surged 90% last year and has increased an additional 23% so far this year. Six analysts who have forecasted the target price of Curaleaf for the last three months have assigned a median target price of $20.34, which implies a 24% upside from the current market price.
The company’s annual report for the year ended December 31, 2020, was scheduled to release yesterday on March 9. The company’s financial and earnings performance in the annual report will be worth a look for those investors who are curious about the company.
Takeaway
There are some key facts investors should look for in these cannabis-based stocks. One is the financial strength. The companies should have a proper structure and strategy for achieving profitability in the future. The second is the growth opportunities. Some of these companies are Canadian companies listed in major U.S stock exchanges, and their ability to grow in the U.S with prohibitions and other restrictions on the federal level may get in the way of the companies’ operations. The third factor is the competitive position. Investors should determine the company’s economic moat by researching the production capacity, distribution channels, and business partnerships.
Disclosure: The author does not own any shares mentioned in this article.
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