Cannabis Sector Outlook: 3 Top Growth Opportunities for Investors

The tide is turning for cannabis growth stocks, marked by a significant shift in the regulatory landscape.

First, the U.S. Drug Enforcement Administration’s (DEA) reassessed of marijuana’s Schedule 1 status. Next, the Health and Homeland Security’s (HHS) recommendation to soften federal restrictions paints a promising picture for cannabis stocks ahead. This regulatory pivot, coupled with President Biden’s recent pardons for marijuana offenses, has propelled the sector’s stocks to new heights. So, it signals an opportune moment for investment consideration.

Furthermore, the American cannabis industry is poised for substantial growth. The U.S. cannabis market is projected to surge. Anticipation of a compound annual growth rate (CAGR) of 24.03% translates into a staggering $46.90 billion by 2027.

Therefore, these three cannabis stocks have caught the eyes of investors, distinguished by their potential for robust growth. Favorable regulatory changes and positive market forecasts represent a unique convergence of opportunity and timing in the burgeoning cannabis sector.

Green Thumb Industries (GTBIF)

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Prominent player Green Thumb Industries (OTCMKTS:GTBIF) has been one of the consistently profitable businesses in its niche.

Moreover, its been riding the positive momentum behind the sector, up a remarkable 97% in the past six months. Additionally, it attracts a strong buy rating from TipRanks analysts and a promising 16.15% upside potential, underscoring the company’s robust market position.

Moreover, the third quarter showed a 9% sequential revenue increase, reaching $275 million, and a GAAP net income of $11 million. Additionally, Green Thumb’s forward long-term earnings per share growth of 51% outshines the sector median by an impressive 415%, set at a mere 10.2%. The expansion of RISE Dispensaries in Florida further emphasizes the company’s growth trajectory, enhancing its market reach.

Looking forward, Green Thumb isn’t resting on its laurels. Analysts project steady earnings growth for 2024 and 2025, backed by strategic investments to bolster its diverse portfolio.

Molson Coors (TAP)

Molson Coors (TAP) logo on a web browser magnified by a magnifying glass

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Diversifying in the cannabis sector, Molson Coors (NYSE:TAP) presents an attractive value opportunity.

With low 11-times forward earnings, the stock appeals to investors seeking a favorable risk-reward profile. This attraction is driven by Molson Coors’ stable business, discounted valuation, and a consistent 41 cents per share quarterly dividend, making it a compelling choice for savvy investors.

Financially, the company’s third-quarter performance adds to this upbeat narrative. Non-GAAP earnings per share of $1.92, outpaces expectations by 38 cents, and revenue climbed to $3.29 billion, a 12.4% increase year over year (YOY). Notably, net sales per hectoliter surged by 8.9%, showcasing the company’s strong pricing power and market adaptability.

Furthermore, outperforming industry benchmarks, Molson Coors and Anheuser-Busch have eclipsed the S&P 500 and consumer staples indices over the past year. This stellar performance and a strong buy recommendation from Quants are steering investor interest toward this top cannabis stock.

Innovative Industrial Properties (IIPR)

A close-up shot of a marijuana growhouse. cannabis trends

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Innovative Industrial Properties (NYSE:IIPR) is arguably the smartest play on the burgeoning cannabis space. It boasts an impeccable record, collecting over 97% of rents consistently. Plus, with an upcoming debt restructuring, IIPR is gearing up for strategic acquisitions and shedding liabilities.

Financially, IIPR reported Q3 funds from operations of $2.09, surpassing expectations by four cents. Also, the company recorded revenue of $77.82 million, reflecting a substantial 9.8% YOY bump, beating estimates by $1.26 million. These strong financial results underscore IIPR’s stability and growth potential.

Therefore, IIPR’s future prospects shine brightly, riding on the wave of expanding marijuana legalization and possible federal reforms. These dynamics could ignite the company’s growth, rendering IIPR an alluring pick for investors in the ever-evolving cannabis sector. Thus, buoyed by a robust buy recommendation from Quant analysts, it’s time to seize the opportunity and ride the green wave toward potential gains.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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