Thanks to a dismal December, the vast majority of marijuana stocks are in positive territory since the beginning of 2019, but none have soared as high as these three. After rocketing up more than 100% this year, investors want to know if they have any more fuel in the tank.
|Company (Symbol)||Year-to-Date Performance||Market Cap|
|Curaleaf Holdings (NASDAQOTH:CURLF)||133%||$5.1 billion|
|HEXO (NYSEMKT:HEXO)||125%||$1.6 billion|
|OrganiGram Holdings(NASDAQOTH:OGRMF)||101%||$1.1 billion|
Past performance doesn’t guarantee future results. In fact, it can make further gains more difficult to come by. Here’s what you need to know about the paths ahead for these cannabis businesses.
1. Curaleaf Holdings: A cosmopolitan pot stock
Curaleaf is a U.S. cannabis company under the control of a Russian oligarch that made its stock market debut on a Canadian exchange last October. The company’s focused on highly populated states with strict and limited licensing rules on the East Coast.
The vast majority of this company’s 44 dispensaries are in states that require cannabis to be cultivated, processed, packaged, and sold by the same business. Fewer options for consumers mean higher profit margins for Curaleaf, but the company still lost $56.5 million last year.
That’s why it was surprising to see Curaleaf agree to acquire the Select brand from Cura Partnersfor around $950 million. On the West Coast, Cura Partners is a wholesale distributor of the popular Select brand of oil-based cannabis products.
Select brand vaporizer cartridges are well regarded for quality and command a high price point, but hardly any of Curaleaf’s stores will be able to sell them until they expand production to each state. The acquisition didn’t make any sense, until we noticed that Boris Jordan, a Russian oligarch who owns 100% of Curaleaf’s multiple voting shares, also owns 11.5% of Cura Partners.
Curaleaf may have had investors best interests in mind when it splashed out on an acquisition that doesn’t fit. If the company can’t prove this is the case within the next few earnings reports, though, the stock doesn’t deserve to rise any further.
2. HEXO: The first harvest festival
Shares of this Canadian cannabis producer have been jumping thanks to enthusiastic investment bank analysts with some good reasons to be excited.
In April, HEXO completed the first harvest in its 1 million-square-foot greenhouse, a big step toward reaching an estimated annual production capacity of 108,000 kg of dried flower annually. HEXO owes its popularity to the medicinal products it makes from that flower and sells to medical patients under the Hydropothecary brand.
Once Health Canada finalizes its rules for edible cannabis products and beverages, HEXO’s joint partnership with Molson Coors (NYSE:TAP) is ready to produce products that meet the criteria.
Continue reading at THE MOTLEY FOOL