2 Disruptive Hemp Stocks Poised for Significant Long-Term Growth
While there is plenty of uncertainty over the legalization of marijuana in the U.S., the industry for hemp-derived CBD products has been gaining momentum. Investors can capitalize on smart stock investments as many of these companies grow – but what are the 2 disruptive hemp stocks poised for significant long-term growth?
A compound found in the hemp and cannabis plant, Cannabidiol or CBD continues to gain immense popularity as a dietary supplement due to its health benefits. Analysts believe that the CBD industry is likely to clock in revenue of $20 billion by 2024 growing at a CAGR of 49%. Research shows that CBD offers a wide range of therapeutic benefits for epilepsy, arthritis, anxiety, and insomnia. In fact, in the US, alcohol and tobacco consumption is on a decline, while CBD-based edibles and beverages are on the rise – particularly after the Farm Bill was introduced by legislators back in December 2018.
With such a diverse range of health benefits, many consumer products are expected to have some degree of CBD-infusion. As a result, CBD-based stocks are likely to witness astounding growth in the next few years. Players in this space are experimenting with these products and are coming up with unique innovations. Soon technology and e-commerce will be a key factor in causing major disruptions in the industry. Of course, there will be plenty of hemp stocks that will turn to be terrible investments. However, we believe these 2 hemp stocks are poised for significant long-term growth:
Aphria (NYSE: APHA) is one particular hemp stock that is poised for significant long-term growth over the next decade. Yes, this hemp stock has been battered in 2020 but cannabis investors shouldn’t let this eclipse Aphria’s massive prospects for the future. For growth investors, we believe that Aphria is quite a prudent pick.
The company has a strong foothold in the medical as well as recreational cannabis & hemp markets across the globe. In fact, Aphria has a huge presence include Germany, Argentina, and Colombia, Malta, and Italy.
Medical Cannabis accounts for 13% of Aphria’s cannabis sales while recreational marijuana makes up for the rest. Notably, its German-based subsidiary CC Pharma accounts for 65.2% of its total revenue. Aphria also produces CBD-oils through the CO2 extraction process and sells it under Champlain, Rideau, and Capilano brand names.
Aphria is one of the rare companies that has posted revenue growth in its fourth-quarter even amid the coronavirus crisis. Its Q4 revenue surged 18% year-on-year (YoY), while for fiscal 2020, its revenue soared 129% YoY. It also reported positive EBITDA for the fifth quarter in a row.
However, the stock fell after recent quarterly results as it posted a net loss for the first time in five quarters. The loss was on account of a non-cash impairment charge and investors over-reacted to the net loss. Evidently, the charge was one-time and doesn’t impact the long-term financials of the company.
Moreover, the company ended fiscal 2020 with cash and cash equivalents of $497.2 million, indicating it has adequate finances to fuel its growth initiatives including acquisitions.
Aphria: A Diversified Hemp Stock
The hemp stock offers distinct products under six brands in the medical and adult-use categories across geographies. It is commendable that the company is expanding in international markets with an additional $15 million to boost it’s sales initiatives in Germany. Further, Aphria also received the EU-GMP certification for its Malta subsidiary earlier this year which makes the expansion prospects of this company promising.
Aphria has launched various types of vape products in the market, which have garnered an encouraging response. However, it is yet to introduce derivatives of other recreational cannabis like chocolates, beverages, edibles, and more.
In a nutshell, Aphria is going strong on its medical cannabis segment and international expansion. One of the rare companies with astonishing sales growth, and strong financials, Aphria is likely to see greater heights in the next decade too.
We believe this hemp stock is poised for significant long term growth but don’t just take our word for it. CNN’s 12-month price forecast has Aphria gaining between 12%-100% with a median expected growth of 32.3%.
Canopy Growth Corporation
In terms of annual production capacity, Canopy Growth (NYSE: CGC) is arguably the biggest cannabis companies in the world. As the regulatory landscape in the hemp industry becomes more conducive to hemp businesses, the pot producer will benefit immensely with its CBD Dietary supplements and infusions.
Looking at the present scenario amid COVID-19, cannabis players with an online presence are set to have a stronger hold on the market. In December, Canopy Growth launched First & Free, a dedicated portal for its state-of-art CBD products. The offerings include the hemp stock’s premium softgel, cream formulas, and oil-drop, tincture products.
Canopy Growth’s Strong Partnerships
Driven by its robust long-term prospects in the CBD-hemp space, Canopy has formed a partnership with celebrities like Martha Stewart. This alliance will go a long way in giving the pot stock a competitive edge. Last week, Canopy launched the first line of products under the Martha Stewart-CBD brand. Hemp-derived soft-gels, CBD gummies, and oil drops under various citrus and berry flavors are some of the offerings in this category. The specialty of these products is that it is made with CBD isolate, a purer form of the compound. The company also plans to launch pet products under the Martha Stewart brand later this year.
Moreover, Canopy’s exclusive partnership with Constellation Brands in 2017 suggests it is on track to develop CBD-infused beverages. The alcohol heavyweight raised its stake in Canopy to 38% with a CA$5 billion investment in 2018. Canopy Growth’s CEO, David Klein, indicated that it plans to double the cannabis beverage production in August.
What’s Next for CGC?
This year has been rocky for Canopy Growth stock in terms of performance. It plunged significantly in March, but it has seen a gradual rebound since then. In the last six months, the stock has surged nearly 70%. The company is yet to be profitable, but that is a common concern across the industry. In terms of growth prospects, Canopy looks extremely promising owing to its line of uniquely-researched CBD products and strength in the online sales model.
While the long term price forecast of CGC is not nearly as attractive as APHA – we still believe that this is hemp stock is certainly poised for significant long-term growth.
2 Disruptive Hemp Stocks Poised for Significant Long-Term Growth
Cannin Investment Group: Your Hemp Stocks Experts
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