However, not all cannabis stocks are created equal. Some companies, particularly in the edibles industry, continue to make strides and are poised for growth. As we navigate the evolving investment landscape, three cannabis stocks stand out as top picks for June 2024.
These companies benefit from the industry’s tailwinds and the easing pressure on risk assets due to falling bond prices. In this article, we will explore the potential of these promising cannabis stocks and provide insights into why they are worth considering for your portfolio.
Investors should consider buying these shares today as the valuations of these companies are still relatively reasonable. One shouldn’t wait until they reach their full potential, as paying full price for anything is generally a poor idea.
TerrAscend (TSNDF)
TerrAscend (OTCMKTS:TSNDF) operates in the U.S. and Canada, producing hemp wellness products and artisanal edibles. The company recently acquired Herbiculture, a medical dispensary in Maryland, which is expected to positively impact EBITDA and cash flow.
In Q2, TerrAscend reported a 12.7% year-over-year revenue growth at $72.1 million and a 50.2% gross profit margin, marking the seventh consecutive quarter of sequential growth. The company anticipates net revenue of at least $305 million and adjusted EBITDA of $58 million for 2023, reflecting 23% and 49% year-over-year growth, respectively.
TSNDF’s smaller market cap compared to other cannabis stocks on major exchanges could potentially lead to higher shareholder value if the stock price increases. With strong financial results and strategic acquisitions, TerrAscend is well-positioned for future success and has breakout potential in the cannabis market.
TSNDF is one of my favorite cannabis stocks to buy for investors who want to invest in a company with a niche focus on edibles.
Green Thumb Industries (GTBIF)
Green Thumb Industries (OTCMKTS:GTBIF) is a vertically integrated cannabis company that manufactures, processes, and distributes various cannabis products, including concentrates, vapes, pre-rolls, edibles, and topicals. The company also operates retail locations throughout the United States. In the first three months of 2023, Green Thumb Industries experienced slight revenue growth, driven by its retail segment and adult-use legalization in additional markets.
Despite market challenges, the company saw a 28% year-over-year increase in units sold.
Meanwhile for the most recent quarter, the company achieved a total revenue of $275.8 million, marking an 11% increase compared to the same period last year. This growth was driven primarily by increased retail and consumer packaged goods sales, including the addition of adult-use sales in Maryland and the opening of 15 new RISE Dispensaries.
The current market challenges may present an opportunity for investors, as Green Thumb Industries is trading at undervalued levels. The market could be mispricing the company relative to its future potential, making it an attractive pick for cannabis investors looking to capitalize on the industry’s growth prospects.
Canopy Growth (CGC)
Canopy Growth (NASDAQ:CGC) is a cannabis company that has been receiving a consensus rating of sell from analysts. However, the consensus EPS target for CGC shows a steady progression to accounting profits by FY2027.
There are several reasons to consider investing in Canopy Growth. The company has been showing signs of improvement, with better margins and reduced cash burn. Management is confident that they will achieve positive adjusted EBITDA by the end of fiscal year 2024, supported by a strategy that has strengthened the company’s balance sheet.
Moreover, Canopy Growth is transitioning towards an asset-light model, which aims to alleviate pressure from capital expenditures and provide additional runway for scaling production. Given the potential for significant share price appreciation based on the EPS target and the company’s improving fundamentals, CGC stock presents itself as an oversold marijuana stock worth considering for investment.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.