The Four Best CBD Stocks to Buy for 2021
- by Investing Insider Magazine
The cannabis legalization movement could propel these four CBD stocks ahead next year.
Over the last several weeks, U.S. CBD stocks have been on a tear.
Since President-elect Joe Biden’s historic win in November, some of the biggest names in publicly-traded cannabidiol (CBD) companies have gained tremendous momentum and are on pace to end the year on a high.
This extraordinary rush is happening because of several factors.
For starters, the president-elect’s win is seen as a big step towards legalization across the country. In fact, Joe Biden promised to “decriminalize the use of cannabis and automatically expunge all prior cannabis use convictions” in his Plan for Black America, which was released this spring. Although the 2018 Farm Bill legalized hemp nationwide (which is the form of cannabis used to produce CBD products), many states have refused to recognize its legality and have continued to arrest people for possession of the non-psychoactive substance.
The cannabis legalization efforts also got a major boost when five additional states passed cannabis legalization measures on November 4, 2020.
Today there are 15 states, two territories and Washington, D.C., that have legalized recreational cannabis, while 34 states and two territories allow medical marijuana.
And in early December, in another stunning victory, the House of Representatives voted in favor of removing marijuana from the federal Controlled Substances Act, which boosted CBD stocks even higher.
With all of these catalysts set to open up new markets and supercharge the cannabidiol industry, 2021 is now shaping up to be a great year for U.S. CBD stocks, with some market analysts predicting a long-awaited price breakout of up to 30%-40%.
However, some companies are expected to perform better than others.
So to help you navigate this red-hot sector, here’s a look at 4 of the best CBD stocks for 2021.
- GW Pharmaceuticals (NASDAQ:GWPH)
- Charlotte’s Web Holdings (OTC:CWBHF)
- Curaleaf Holdings, Inc. (OTC:CURLF)
- Village Farms International, Inc. (NASDAQ:VFF)
GW Pharmaceuticals (NASDAQ:GWPH)
Founded in 1998, GW Pharmaceuticals plc (NASDAQ:GWPH) is the biopharmaceutical company behind cannabidiol (CBD) product EPIDIOLEX.
Commercialized in the U.S. by its U.S. subsidiary Greenwich Biosciences, EPIDIOLEX is an oral CBD solution that is used to treat seizures in patients with Lennox-Gastaut syndrome (LGS), Dravet syndrome, or tuberous sclerosis complex (TSC). Because seizures can often present in early childhood, the drug is prescribed to very young patients that are one year of age and older. In Europe, the trade name for the drug is EPIDYOLEX®
GW also markets and sells Sativex® (delta-9-tetrahydrocannibinol and cannabidiol in the EU; nabiximols in the US), which is an oromucosal spray that contains the principal cannabinoids delta-9-tetrahydrocannibinol (THC) and cannabidiol (CBD), as well as specific minor cannabinoids and other non-cannabinoid components. It was developed for the treatment of spasticity associated with multiple sclerosis and spinal cord injury and is currently under late-stage clinical programs in order to get approval from the FDA.
In addition, GW also has a deep pipeline of additional cannabinoid product candidates with some products currently in clinical trials for autism and schizophrenia.
After a dismal 2018 in which GW reported revenue of $12.7 million and a net loss of $295.2 million, things began looking up.
After the approval of EPIDIOLEX, 2019 revenues soared to $311.3 million and in the first 3 quarters of 2020, the company’s revenues were $379 million.
GW is still losing money, but their losses have shrunk considerably. 2019 net loss was $9 million and the first 3 quarters of 2020 total net loss was $29 million.
With the recent spike in its share price, investors are betting that 2021 will be the year that GW turns things around and begins generating a profit.
Charlotte’s Web Holdings (OTC:CWBHF)
Founded by the Stanley Brothers and based in Boulder, Colorado, Charlotte’s Web Holdings, Inc. (OTC:CWBHF) is the market leader in the CBD wellness space. Their products are distributed through more than 22,000 retail locations, select distributors, and online through the company’s website at www.CharlottesWeb.com.
The company produces products for a variety of categories including CBD oil tinctures (liquid products), CBD gummies (sleep, stress, inflammation recovery), CBD capsules, CBD topical creams and lotions, as well as CBD pet products for dogs. Their family of brands include Charlotte’s Web™, CBD Medic™, CBD Clinic™, and Harmony Hemp.
Charlotte’s Web recently reported a solid quarter. Highlights include:
- Consolidated revenue increased 0.4% to $25.2 million vs. Q3-2019 and increased 17% vs. Q2-2020, marking a return to consecutive quarter growth
- Direct-to-Consumer (“DTC”) eCommerce sales increased 27.5% year-over-year and contributed 66.3% of Q3 revenue
- Gross profit of $15.2 million, or 60.3% of consolidated revenue
- $65.9 million cash and $128.6 million working capital on September 30, 2020
With this latest return to consecutive quarters of revenue growth, CWBHF is on track for a much better performance in 2021.
Curaleaf Holdings, Inc. (OTC:CURLF)
Founded in 2010 and headquartered in Wakefield, Massachusetts, Curaleaf Holdings, Inc. (OTC:CURLF) is a vertically-integrated, leading U.S. cannabis company that cultivates and processes cannabis and is also a provider of consumer cannabis products. It offers oils for vaporizing, cartridges, concentrates, tinctures, mints, capsules, edibles, and flower pods. The company also provides hemp-based CBD products.
Curaleaf currently operates in 23 states with 96 dispensaries, 23 cultivation sites and over 30 processing sites, and employs over 3,000 team members across the United States.
CURLF recently reported a record quarter. Some highlights include:
- Record Pro Forma Revenue of $215.3 Million
- Record Managed Revenue of $193.2 Million, up 164% and in Line with Company Guidance
- Record Year-to-Date Managed Revenue of $419.6 Million
With one of the strongest balance sheets in the industry, record growth over the last year, and a long runway ahead, Curaleaf is well-positioned to have a very strong 2021.
Top CBD Stock #4:
Village Farms International, Inc. (NASDAQ:VFF)
Of the 4 companies on this list, Village Farms International, Inc. (NASDAQ:VFF) is the only one that is currently profitable.
It is one of the largest and longest-operating greenhouse growers in North America, and is leveraging its decades of experience in large-scale, low-cost intensive agriculture and as a vertically integrated produce supplier to pursue high-value, high-growth plant-based Consumer Packaged Goods opportunities in cannabis and CBD in North America and selected markets internationally.
In Canada, VFF recently acquired the remaining 41.3% of the British-Columbia-based Pure Sunfarms, and now owns 100% of one of the single largest cannabis operations in the world, the lowest-cost greenhouse producer, and one of the best-selling brands. Pure Sunfarms has generated profitability for seven consecutive quarters.
In the U.S., subject to compliance with all applicable U.S. federal and state laws, Village Farms is pursuing a strategy to become a leading developer and supplier of branded and white-labeled CBD products targeting “big box” and other major retailers and consumer packaged goods companies, and with one the largest greenhouse operations in the country, is well positioned for the potential federal legalization of high-THC cannabis.
Internationally, Village Farms is strategically targeting selected, nascent, legal cannabis and CBD opportunities with significant long-term potential, with an initial focus on the Asia-Pacific region through its investment in Australia-based Altum International.
According to its latest quarterly report, VFF reported sales of $122.7 million and net income of $4.6 million. For the nine months ended September 30, 2019, VFF had sales of $111.5 million and net income of $9.5 million.
Because of VFF’s strong earning power, 2021 is likely to be another excellent year for the company.
In fact, according to CEO Michael DeGiglio, “The deep experience and organizational strength underlying our legacy produce business, which delivered another solid quarter, combined with our proven cannabis capabilities provides Village Farms with a rock-solid foundation as we transform to a vertically integrated, agriculturally-based CPG business to aggressively pursue high-growth opportunities in emerging legal cannabis and related markets in the United States and other targeted markets. There is no cannabis supplier in Canada or the U.S. with our combination of experience, capabilities and more than ten million square feet of greenhouse assets, and we are encouraged by the evolving regulatory environment in the U.S. and are developing multiple strategies to capitalize on any favourable U.S. regulatory developments in 2021. We will pursue these opportunities with prudent, disciplined capital allocation and focus on return on invested capital.”
-Investing Insider Magazine
CBD stocks could surge in 2021 and 4 of the best companies are GW Pharmaceuticals (GWPH), Charlotte’s Web Holdings (CWBHF), Curaleaf Holdings, Inc. (CURLF), and Village Farms International, Inc. (VFF)
3 Top Cannabis Stocks to Buy in February
All three of these high-flying stocks should soar much higher.
Former TV news anchor Dan Rather has referred to certain political races in the past as hotter than “a Times Square Rolex,” “the devil’s anvil,” and “a Laredo parking lot.” His folksy descriptions could just as readily apply to the U.S. cannabis market. No matter how you look at it, pot is hot.
Some investors have jumped on the bandwagon of marijuana stocks with less-than-solid underlying businesses. The smarter move, though, is to go with the stocks of well-run companies with strong growth prospects. Here are three top cannabis stocks to buy in February that check off those boxes.
Image source: Getty Images
1. Cresco Labs
I recently wrote that Cresco Labs (OTC:CRLBF) was a growth stock that could realistically double in 2021. When I made that prediction, the stock was up nearly 20% year to date. Now, Cresco’s shares are up over 60% for the year. I might not have been optimistic enough.
Cresco’s current markets continue to grow. The company is a leading cannabis wholesaler in California. Cresco is a top retailer in its home state of Illinois, and it has operations in eight other states.
However, Cresco is also expanding into new markets. Its acquisition of Bluma Wellness gives the company a foothold in the fast-growing Florida medical cannabis market. Cresco recently won a license to sell recreational marijuana in Arizona, a state where it already operated medical cannabis dispensaries.
Even with its big gains this year, Cresco’s market cap lags far behind several of its peers that generate similar sales. My view is that the stock will at least double this year. It could rise a lot more than that if marijuana is decriminalized at the federal level.
GrowGeneration (NASDAQ:GRWG) ranked as the best-performing cannabis stock in 2020, with a gain of 881%. Its shares are still soaring this year, jumping 43% year to date. Don’t worry about being too late to the party, though: GrowGeneration has plenty of room to run.
GrowGeneration operates the largest chain of hydroponics and organic gardening retail stores, but still has only 46 stores out of around 1,000 total hydroponics stores in the U.S. As of now, GrowGeneration’s goal is to own 55 stores by the end of 2021. It expects to deliver revenue growth this year of at least 75%.
GrowGeneration has two clear paths to generate strong long-term growth, in my view. One is to continue its consolidation of the fragmented retail hydroponics market. Another is to move into additional states that have recently legalized either medical or recreational cannabis or are likely to soon do so.
The company could get help from Uncle Sam on the latter path to growth. With Democrats in control of the U.S. Congress and President Joe Biden in the White House, significant federal cannabis reform appears likely. That could pave the way for even more states to legalize cannabis.
3. Innovative Industrial Properties
If you’re more of a conservative investor, Innovative Industrial Properties (NYSE:IIPR) gives you an attractive way to profit from the cannabis boom. The company is the leading real estate investment trust (REIT) focused on the U.S. medical cannabis market.
Like most REITs, IIP buys properties and then leases those properties out to generate steady revenue. The key difference between IIP and most REITs is that its tenants are medical cannabis operators. The company currently owns 67 properties in 17 states with a weighted-average remaining lease term of around 16.7 years.
IIP has been a big winner, with its shares soaring 141% in 2020 and jumping 17% so far this year. It’s also a dividend investor’s dream, offering a reliable and fast-growing dividend.
Could the potential reversal of federal laws limiting access to financial services for cannabis companies hurt IIP? Perhaps. The REIT might not be as appealing to cannabis operators if they could easily obtain bank loans.
All three of these high-flying stocks should soar much higher.