With the fire lit under 2018, the fundamentals of the cannabis market are poised for a breakout year. In 2017, The North American Marijuana Index made significant late-year gains, while four publicly-traded companies- Aphria Inc., Aurora Cannabis, Canopy Growth, and MedReleaf - reached market caps of at least $2 billion. Mergers and acquisitions ruled the latter half of the year, as newly-crowned corporate behemoths gnawed away at their bite-sized competitors.
Still, an air of uncertainty festered within the cannabis industry in 2017, as companies jockeyed for position and investors on both sides of the U.S.-Canadian border walked the line through federal laws and regulations. In Canada, the Aurora-CanniMed-Newstrike saga permeated the industry, to the point of affecting the broader capital markets. Meanwhile, uncertainty held back the U.S. cannabis market, as marijuana’s status under federal law continued to hinder companies in both countries.
If anything, 2017 was a decisive year for the cannabis sector, bridging the voter revolutions of 2016 to the legalized markets of 2018. For now, investors would be wise to stick their money into the Canadian market. Even as California opens up the most extensive adult-use recreational market come the New Year, marijuana’s status as a Schedule I drug under federal law makes it a hard sell in the states. The current administration, led by a reinvigorated Jeff Sessions looking to re-fight the 1960’s will continue to hold back what already is a billion dollar industry.
Here is a look at the top stocks to keep an eye on in 2018:
MedReleaf Corp. (LEAF.TO)
MedReleaf is the darling pick on every investor’s top ten list coming into the new year. The reason is due to their astonishing growth. After raising capital through an initial public offering (IPO) of its stock this past year, the company expanded their facilities in Ontario. With low production costs and increased capacity - as much as 80 percent this year - the company is well poised for the recreational market in Canada this summer. Interestingly, what MedReleaf has done is go after the higher-end market with better quality cannabis strains and higher-price oils and extracts.
Since going public MedReleaf’s prices have soared, with a 52 week low of $7.45 up to a high of $22.78. They currently sit at a market cap of $2.01 billion.
Aphria Inc. (APH:CA)
Quietly jumping onto everyone’s radar this year was Aphria Inc., who has invested $100 million in a four-phase expansion set to complete by January of 2019. All told they are looking at a yield of approximately 100,000 kilograms of dried cannabis every year when the project finishes. Aphria became a household name, however, when they signed what many experts deemed a landmark deal with Shoppers Drug Mart, Canada’s largest retail pharmacy chain. The company will be the exclusive online supplier of cannabis for the retail giant. It was a real watershed moment for the cannabis industry in 2017. The company ran into a bit of trouble in 2017 when new rules imposed by the Toronto Stock Exchange threatened to have them delisted, forcing them to divest from their holdings in the U.S. However, investors would be wise to take a closer look at this burgeoning cannabis company.
They also saw significant gains in 2017, with a 52 week low of $4.55 and a high of $19.83. Currently, Aphria is trading at $18.70 per share.
Canopy Growth Corporation (WEED:CA)
Canopy Growth is the granddaddy of all cannabis stocks available on the market today. Playing the mergers and acquisitions game with grace and style, the company has quickly bought its way to the top of the market. Almost a year ago they acquired Mettrum Health, and they now have the most extensive share of Canada’s medical marijuana market. Their growing capacity is somewhere in the area of 2.4 million square feet, with an option to purchase another 1.7 million square feet for expansion. If that is not enough, in 2017 beverage company Constellation Brands bought a 9 percent stake in the company, showing just how legitimate and mainstream the cannabis sector has become.
Canopy currently has a market cap of $5.68 billion, with a 52 week low of $6.58 and a high of $33.09. At last look, they were trading at $29.74 per share.
Aurora Cannabis Inc. (ACB.TO) had a stellar 2017, with prices ranging from $1.90 up to $10.52. The long, drawn-out battle with CanniMed should give investors a bit of pause, as it does leave room for some volatility in the stock, at least until the issue settles. Still, with a market cap of $4.39 billion, they cannot be ignored.
Namaste Technologies Inc. (CSE:N) had their ups and down throughout 2017, but saw a 360 percent increase in November, a number that would make any investor look twice. Their numbers are not as impressive as the others on this list, but they are worth tracking.