The past few years have been the best of times and the worst of times in the markets, but especially for weed stocks.
The split has been largely geographic. American weed stocks have done exceedingly well. Since 2019, shares of the two largest MSOs (multi-state operators) have nearly tripled and quadrupled. The biggest U.S. retailer and the biggest U.S. REIT (real estate investment trust) have done even better.
Canadian cannabis plays however, have struggled. Over the same period a basket of American cannabis stocks has delivered triple-digit gains, the ETFMG Alternative Harvest ETF (NYSEARCA:MJ) has provided total returns of negative 6%, including dividends. That’s even with some external help for the mostly Canada-focused fund: the current top holding, GW Pharmaceuticals (NASDAQ:GWPH), has more than doubled over the same stretch.
The question, obviously, is whether those geographic diverging fortunes will continue. Hopes for U.S. legalization have buoyed Canadian operators of late — but could be just as important for their American counterparts. Valuations on the U.S. side now look more questionable; there may be more value north of the border, assuming the supply glut in the Canadian market eases and international markets contribute.
Here are the top 10 weed stocks:
- Canopy Growth (NASDAQ:CGC)
- Cronos (NASDAQ:CRON)
- Aurora Cannabis (NYSE:ACB)
- Tilray (NASDAQ:TLRY)
- Hexo (NYSE:HEXO)
- Sundial Growers (NASDAQ:SNDL)
- GrowGeneration (NASDAQ:GRWG)
- Innovative Industrial Properties (NYSE:IIPR)
- Curaleaf (OTCMKTS:CURLF)
- Green Thumb (OTCMKTS:GTBIF)
Given the wider context, it’s worth considering where the biggest weed stocks sit at the moment. That requires an understanding of where they’ve been to figure out where they might be going. Let’s dive in.
Grading the Top 10 Weed Stocks: Canopy Growth (CGC)
Canopy Growth brought weed stocks to the mainstream. In 2017, alcohol giant Constellation Brands (NYSE:STZ,NYSE:STZ.B) had invested almost $200 million in Canopy the year before in a bid to create cannabis-infused beverages.
The following year, Constellation went bigger, infusing some $4 billion into Canopy. The deal sent CGC stock soaring and legitimized the entire industry overnight.
The problem has been everything that’s happened since then — which is to say, not enough. For the first nine months of FY2021 (ending March), Canopy posted an Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $246 million.
That’s roughly 56% of revenue. Canopy’s size and the capital raised from Constellation haven’t prevented the company from enduring same struggles dogging other Canadian operators.
Big losses and disappointing sales have in turn pressured CGC stock. On the day Constellation’s 2018 investment was announced, CGC closed at $32.11. In the nearly three years since, it’s…