3 Canadian Marijuana Stocks to Buy and Hold Now
Across the board, Marijuana stocks have been crushed by COVID-19 and other factors but our analysts have identified some great potential buy-and-hold cannabis stocks, currently trading below book value – if you’re willing to buckle up for some short term volatility.
Markets in 2020 have been off to a brutal start between the uncertainty of the COVID-19 crisis and global oil disputes. Canadian marijuana stocks are no exception. In fact, many Canadian marijuana stocks have lost half their value in the markets since April of 2019. Both federal and provincial governments are to blame for a mountain of regulatory issues, licensing delays, lack of traditional financing and supply bottlenecks throughout the legal marijuana industry in Canada.
However, there are three Canadian cannabis stocks that appear to have the growth trajectory needed to generate profits in 2021 and healthy returns for investors willing to sit on these pot stocks for the next year or more. Although these Canadian pot stocks will continue on a volatile path amidst the global uncertainty of the COVID-19 crisis – they have all the right things going for them for long term profitability.
We’ve certainly seen a ton of buzz about Aphria (NYSE:APHA) in the headlines recently. In our recent analysis of Aphria, we identified the 3 main reasons why this company will not only weather the COVID-19 pandemic, they’re on track to turn a significant profit for investors.
We’re personally going long on Aphria for 3 main reasons: International Cannabis Presence, Cash on Hand and Edible Cannabis Product Portfolio.
International Cannabis Presence: Currently, a majority of Aphria’s sales are a result of it’s CC Pharma subsidiary in Germany – and have been since its acquisition in early 2019.
Cash Balance: Aphria’s sizeable cash balance sheet, one of the most robust in the cannabis industry, that will help it endure any hardship it may experience during the coronavirus. The cash balance sheet tops out at just over $600 million. Aphria went through a period of non-essential asset liquidation and raised $460 million in convertible debentures. The company has the remainder of its cash balance sheet through $80 million in term debt and $160 million in equity.
Edible Cannabis Products: The company recently debuted a cannabis edible product portfolio that was timed along with the legalization of cannabis edible products in Canada. Aphria was on the line with the wave of cannabis edible legalization as Canada’s edible legalization, nicknamed “Cannabis 2.0”, was effective on December 14th of 2019. Cannabis edibles sold by the company, those within its “Aphria Diamond” product line, were rated as one of the best edible products by consumers. Aphria Diamond edible products, specifically Good Supply and Riff, have the tetrahydrocannabinol (THC) and cost-per-gram with it to compete and dominate the Cannabis 2.0 market.
Next up is New Brunswick-based Organigram (Nasdaq: OGI) which has been in our good graces for the last several years. In terms of Canadian pot stocks, they rise far and above and are on pace for some serious profits in 2021. Unlike other Canadian cannabis companies, Organigram has elected to not make rampant acquisitions and focus on its main operational facility. By the way, this same facility yields 2-3x what the average Canadian cannabis facilities yield. Organigram has invested heavily in its cannabis derivative infrastructure as well – giving it clear advantages in the Cannabis 2.0 space. By the way, Organigram is one of the only Canadian cannabis stock that’s generated operating profits almost every quarter since inception. No small feat for any publicly traded cannabis company – Canadian or otherwise. Organigram continues to be one of the Canadian marijuana companies to watch.
Fundamentally, we’ve always had a soft spot in our hearts for Organigram and we believe this is an incredible long-term buy-and-hold investment opportunity that we continue to share with our close friends and family.
Finally, we have extraction-only companies like MediPharm Labs (OTC: MEDIF) which should not be ruled out when evaluating new Canadian cannabis investment opportunities. Medipharm is counting on their role as in the processing middleman niche to help drive growth and expansion. They’re also a “unicorn” in the sense that it took about six months to move from start to reoccurring revenues. Although Medipharm recently sued HEXO for a contract breach – they should still be on track for significant revenue generation this coming year.
While these three Canadian cannabis stocks appear to have the growth trajectory needed to generate profits in 2021 these pot stocks will continue on a volatile path amidst the global uncertainty of the COVID-19 crisis – they have all the right things going for them for long term profitability. Only time will tell. In the meantime, happy investing.
3 Canadian Marijuana Stocks to Buy and Hold Now
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