Cannabis shares are booming, the potential for investors is great:
More and more countries are legalizing marijuana as a drug. Whoever bought shares of Aurora Cannabis a few years ago, for example, was able to increase his capital by more than 1,500 percent. How you can profit from the marijuana boom, where you can find the best cannabis shares and how to buy cannabis shares is revealed here.
BUYING CANNABIS SHARES – THE MOST IMPORTANT :
- Cannabis stocks are experiencing a hype since marijuana use is legal in several countries.
- Companies in the cannabis industry are expanding. More and more medical cannabis products are being manufactured and sold.
- If you as an investor want to participate in this boom, you can invest in the best cannabis stocks.
- Tip: Spread your capital over the several cannabis shares. This is particularly easy with the Cannabis Stock Index.
CANNABIS INDUSTRY WITH FANTASTIC PROSPECTS
The cannabis industry has been experiencing a real hype for some years now: more and more countries are legalizing marijuana, and the share certificates of cannabis companies have experienced a real upward rally. For example, those who invested 10,000 euros in shares of Aurora Cannabis in 2015 were able to enjoy more than 150,000 euros in early 2019.
And the potential of cannabis shares remains large: After 2017 Uruguay and some US states declared cannabis legal, Canada followed in 2018. Many European countries are also paving the way to free marijuana consumption: In Spain, for example, the use is now only classified as an administrative offence, in Germany cannabis can be prescribed to pain patients since March 2017.
Vivien Azer, managing director at Cowen and top analyst in the cannabis industry, described 2018 as a “monumental year for cannabis”. She expects the big cannabis companies to continue to enjoy fantastic prospects.
Michael Lavery, analyst at the US investment bank Piper Jaffray, expressed similar euphoria for the still young industry on the US news channel CNBC in January 2019. Lavery said that the global cannabis market could reach between 250 and 500 billion US dollars in the longer term.
After the setbacks for the industry in recent months – also due to the corona pandemic – there are opportunities for opportunity-oriented investors to enter the market.
INVEST IN THE CANNABIS STOCK INDEX
Among the market leaders in the cannabis sector are the Canadian companies Canopy Growth, Tilray, Aurora Cannabis and Aphria as well as the British group GW Pharmaceuticals. By market value, these cannabis producers are the “Big Five” in the industry.
With an investment in the Cannabis Stock Index, you as an investor are betting on the most important companies in a package and can thus profit from the success of the “Big Five” cannabis stocks. But that’s not all: the Cannabis Stock Index includes other companies that are active in the marijuana production sector and also have promising potential, including the Canadian CannTrust Holdings and the US company Innovative Industrial. With EToro you can invest in this index and thus in the most important cannabis stocks.
Note: If you invest in the Cannabis Stock Index, you have several advantages. Among other things you do not have to buy individual shares and at the same time you spread your invested capital widely among different marijuana companies.
Important: Please note that you should already have some experience on the stock exchange when investing in the Cannabis Stock Index. Ideally, you are well versed in CFD trading. In any case, only invest in CFDs if you understand the product and are familiar with the risk involved.
The largest marijuana production company by market capitalization is Canopy Growth. The market capitalization of the Canadian company in June 2020 is close to 5 billion euros.
By the end of 2016, Canopy Growth had already bought into the German market by purchasing the company Spektrum Cannabis. Spektrum Cannabis was the first company in Germany to receive an import permit for medical cannabis from Canada. The largest shareholder of Canopy Growth is the alcohol giant Constellation Brands. The corona manufacturer invested 3.8 billion dollars in Canopy Growth in 2018 and secured a share of almost 40 percent of the Canadian marijuana producer.
Canopy Growth produces cannabis extracts using state-of-the-art CO2 extraction technology. This process extracts the major cannabinoids (THC and CBD) and the smaller cannabinoids, terpenes and flavonoids. These are then processed into medical cannabis. Canopy Growth produces industrial hemp, which is further processed into skin care products and textiles, among other things. The Canadian company also produces cannabis oil products and softgels with varying THC and CBD contents. Softgels are needed, for example, for the production of cannabis pills.
The Canopy Growth share is on the “Buy” list of top analyst Vivien Azer. She described the Canopy Growth share certificates as “top share 2019”.
The US investment bank Piper Jaffray gave a similarly positive assessment of Canopy Growth shares. At the beginning of 2019, analyst Michael Lavery upgraded the shares of the Canadian cannabis company to “Overweight”. “We expect strong long-term growth in the industry and we believe Tilray is well positioned to be one of several potential winners,” the equity expert said.
Our recommendation: There is no way around the largest cannabis company for you as an investor if you really want to invest in this still young (and volatile) industry. Canopy Growth is one of the most promising investments in cannabis stocks.
Tilray is one of the three largest cannabis companies in the world by market value. The market capitalization of the Canadian pharmaceutical and cannabis company was almost 770 million euros in June 2020.
Tilray went public in July 2018. The Canadian company was the first cannabis company to venture an IPO on the US technology exchange Nasdaq. Starting from an issue price of USD 17, the share price had at times increased more than tenfold. On September 18, 2018 alone, the share price shot up by 29 percent after the USA approved the import of marijuana for medical research purposes. In December 2018 Tilray signed a contract with Novartis subsidiary Sandoz Generic Pharmaceuticals for the distribution of medical cannabis products.
Medical cannabis is Tilray’s primary business. Tilray, like its competitors Canopy Growth, uses a state-of-the-art cold extraction process to preserve the active ingredient content of cannabis products. The result is a pure, aromatic and effective medical product. Tilray uses colours in its medical cannabis products to help identify the general category of cannabinoids: THC dominant, CBD dominant and THC/CBD balance. The company works closely with patients, doctors and regulatory authorities.
Tilray is recording gigantic growth figures. In the second quarter of 2018, the cannabis company achieved 95 percent more sales than in the same period of the previous year. At the same time, Tilray is burdened with high costs for the expansion of its business – but this is an investment in the future. Tilray plans, for example, to conquer the market for cannabis-based drinks.
“We continue to regard the international medical market as one of the most important investment highlights for Tilray,” says top analyst Vivien Azer from Cowen.
The US investment bank Piper Jaffray supports Vivien Azer’s vote: at the beginning of 2019, analyst Michael Lavery upgraded the Tilray share to “Overweight”. “We expect strong long-term growth in the industry and we believe that Tilray is well positioned to be one of several potential winners,” the equity expert told CNBC.
Our recommendation: It is difficult for investors to get around the Tilray share. The Canadian company is one of the market leaders in medical cannabis products. Tilray products are available in over ten countries on five continents. If you want to buy Tilray shares, however, you need strong nerves: the share has been very volatile since the IPO.
Aurora Cannabis is probably one of the best known and most popular cannabis companies. The Canadian company is one of the three largest cannabis companies in the world by market capitalization. In June 2020 the market value of Aurora Cannabis was more than 1.3 billion euros.
With the acquisition of the organic cannabis company Whistler in January 2019, Aurora Cannabis further expanded its strong position in the cannabis industry. Whistler operates indoor licensed production facilities and is one of the eight companies that were the first to receive permission from the Canadian authorities to grow cannabis for the legal market. With the acquisition of Whistler, Aurora further diversifies its own supply. The company continues to focus on international expansion. For example, a large hemp production plant is planned in Denmark for the cultivation of pharmaceutical marijuana.
Aurora Cannabis offers a particularly wide range of products, including dried cannabis, softgels for pill production, cannabis oil and THC powder as an alternative to smoking or for addition to food and drink. This wide range of products is one of many reasons for the fantastic growth of Aurora Cannabis: sales of the popular cannabis group increased by 260 percent year-on-year in the second quarter of 2018.
The Aurora Cannabis share should have a bright future. John Chu, an analyst at Laurentian Bank, believes that Aurora could have the potential to become a leader in the medical, wellness, nutraceutical (standardized nutrient) and non-prescription markets. This was stated by the cannabis analyst in his review of the financial statements at the beginning of 2019, in which he simultaneously issued a clear buy recommendation for Aurora Cannabis shares.
Our recommendation: With an annual production of over 600,000 kilograms of cannabis, it seems logical that Aurora will soon enter into a partnership with a company from the beverage, tobacco or pharmaceutical industries. Together with the already very broad product range, this makes Aurora Cannabis shares an exciting investment – despite the high volatility in the sector.
CANNABIS SHARES – THAT’S WHY YOU NEED TO BE IN THE DEPOT
The cannabis industry is at the very beginning, the growth potential is huge. The fact that the markets for cannabis are being opened and more and more countries are joining the legalization of hemp consumption is only one of the reasons for the high potential of this industry. Especially in medicine the properties of cannabis are becoming more and more important.
MARIJUANA IN MEDICINE: CANNABIS ON PRESCRIPTION
While the possession and consumption of marijuana was still fundamentally demonised a few years ago, medical cannabis is being used more and more in pain therapy. For example, the active ingredients CBD and cannabidiol contained in marijuana can make life easier for patients with chronic pain. Furthermore, CBD and cannabidiol reduce the occurrence of tics (involuntary movements of muscles) in people with Tourette’s syndrome. Pharmaceutical cannabis also helps to mitigate side effects of chemotherapy, treat unpleasant ringing in the ears in tinnitus syndrome and reduce panic attacks in patients with PTSD (Post Traumatic Stress Disorder).
In Germany and many other countries it is now taken for granted that marijuana is used as a drug, cannabis on prescription is the norm in this country.
Important: Some countries, which continue to ban cannabis completely, want to open up to the medical use of cannabis – after all, not all medical uses of cannabis have been exhausted yet.
CANNABIS MARKET SOON BIGGER THAN THE BEER INDUSTRY
Companies that grow the hemp plant and produce medical marijuana do not need to create a new market for their products, the market already exists. Millions of people worldwide consume marijuana, currently still mostly illegally. With the legalization of cannabis the (still) illegal market will soon open up for the producers.
This is one of the reasons why the companies themselves expect a rapid growth of their industry. Cam Battley, Chief Corporate Officer (CCO) of Aurora Cannabis, said in an interview with Lynx Broker: “For a number of very important reasons I firmly believe that in a few years the global cannabis sector will indeed be bigger than the global brewing sector.
Cam Battley is certain that cannabis will soon become global in scope and will displace other industries, or at least compete with them on a large scale. “Cannabis is a very interesting substance because it poses a serious threat to a number of major global markets, for example the alcohol industry, but also pharmaceuticals, and perhaps tobacco,” says Aurora Cannabis’ CCO.
Vic Neufeld, CEO of Aphria, one of the largest cannabis producers, goes even further. In an interview with Börse ARD in October 2018, he speculated on the opening of further business areas: “Maybe soon there will be CBD or THC in food, beverages or other things. CBD will become mainstream.”
IPOS IN THE CANNABIS INDUSTRY
That the cannabis industry is growing is no longer a secret. But not only the hype about the hemp plant itself is big – there has also been a real rush on cannabis shares for months.
This gold-rush mood on the capital market was triggered by the legalization of cannabis in the most populous US state of California at the beginning of 2018. As a result, the prices of cannabis shares shot up and more and more manufacturers of marijuana and cannabis products went public.
The cannabis industry is on course for growth and consolidation. Besides IPOs, there will be many takeovers in the coming months. One of the biggest mergers already took place at the beginning of 2018: the marijuana producer Aurora Cannabis took over its competitor CanniMed Therapeutics for the impressive sum of 765 million US dollars. So for investors, there is still a lot of potential in the billion-dollar marijuana market.