Many cannabis stock investors are hedging their bets on the future of the industry and its potential for great gains; at the same time, the industry’s volatility hints at a coming bubble among marijuana stocks.
When it comes to predicting future gains for marijuana stocks or deciding which are the best marijuana stocks to invest in, analysts are split.
And for valid reasons: aggressive promotions of stock, gimmicks, acquisitions that are questionable, the market has experienced a rift these past months. Add to mix the anticipation of Canada’s legal recreational market and more statewide legalization in the U.S., it is hard to figure. One certainty in the midst of this volatility is the inevitable inundation of capital from the pharmaceutical, big tobacco and alcohol industries following concentrated efforts to repeal marijuana’s prohibition.
It’s too early to call the probability of smaller investors cashing in on what the stock market has come to know as the cannabis stock craze. What is known, the cannabis sector will produce clear winners as well as losers, which, only time will tell.
In the meantime, there are four stocks that seem to have above average potential of winning this race on the cannabis stock market.
While the general consensus is Big Tobacco should be joining the cannabis stock industry at some point in time, some analysts believe this time is now. With a decline in cigarette smokers, the push has been toward e-cigarettes among big tobacco companies. However, since marijuana has been booming with signs of big gains ahead, these tobacco companies seem to be pushing to enter the industry.
Though not a marijuana stock, it seems likely that tobacco industry giant Philip Morris (NYSE: PM) will soon join the sector.
Philip Morris (NYSE: PM) entered the sector in 2016 with the second most substantial investment in the cannabis industry that year. Israel-based Syqe Medical, makers of a cannabis inhaler and the recipient of Philip Morris’s $20 million investment, gave the tobacco giant ownership of a patented GMO strain high in terpenes.
Vivien Azer, an analyst for Cowen, commented at the time of the deal “Vaping is one of the fastest-growing segments in both nicotine and cannabis. Upon federal legalization, Big Tobacco could leverage its expertise to explore the legal cannabis market through vapor.” According to her estimations, cannabis could be the ticket to Big Tobacco companies achieving a near doubling of growth and, upon federal legalization of marijuana, claiming nearly one-fifth of the market potential by 2036.
It remains to be seen whether or not this investment in the marijuana sector will give Phillip Morris the hefty boost it needs to rebound its fortunes, but this bold move may be the company’s best shot.
It would make tactical sense for Altria Group (NYSE: MO), another Big Tobacco king, to join the marijuana stock sector.
Similar to competitor Phillip Morris, Altria Group (NYSE: MO) controls more than half of the U.S. sales of cigarettes. Though this tobacco king has not publicly hinted at intentions to enter the marijuana market, tactically speaking, it is likely a consideration on the table. The belief among numerous investors is that it’s only a matter of time before Altria Group makes a big move.
Going back to Vivien Azer’s analysis in 2016, this tobacco giant may be biding time before marijuana is federally legalized in order to enter the sector and fully leverage its own industry expertise in an exploration of the market via vapor.
Big pharmaceutical company Insys Therapeutics (NASDAQ: INSY) shows great potential for contributing to major MMJ stock inroads.
The current potential for Insys Therapeutics (NASDAQ: INSY) lies with its groundbreaking drug, Syndros. The first FDA-approved liquid cannabinoid, the aim of Syndros is the treatment of anorexia in AIDS patients, in addition to nausea and vomiting in chemotherapy patients. With a reported $236 million cash-in-hand at the close of 2016, Insys seems set to further invest in the MMJ sector through the research and development of more cannabis-based pharmaceuticals.
A lot rides on the success of Syndros, however, as the drug did not bring in the revenue the company had hoped for in 2017 Q3 and Q4 reports. Overall, Insys has experienced significant drops in revenue from the end of 2017 through this first half of 2018. The company hopes to make its comeback through improved sales performance of Syndros, resolution of an ongoing DOJ investigation, and diversification of product revenue.
GW Pharmaceuticals (NASDAQ: GWPH) entered the cannabis stock sector with a hefty valuation and big aims.
Valued at $3 billion, GW Pharmaceuticals (NASDAQ: GWPH) is one of the larger pharmaceutical firms to enter the marijuana industry. And the pharma company is working hard to make history through introducing its experimental drug, Epidiolex, as the first FDA approved, cannabis-based treatment of epilepsy in the U.S.
The hope is that the successful introduction of Epidiolex, while focused on treating childhood epilepsy, will open the door to the adult epilepsy market for GW. The market for patients suffering from epilepsy, both children and adults, is larger than it seems; Epidiolex’s success would position the company for potentially big expansion.
The company’s motives for entering the CBD sector were called into question, but GW asserts its simple goal is to offer pharmaceutical alternatives. In an interview, GW executive Steve Schultz stated, “We’re not looking to impact the availability of other products on the market. Our goal is to provide an additional option for patients and physicians who desire a purified version of CBD for treatment of seizures.”
(For more on GW Pharmaceuticals, read Did This Marijuana Stock’s Announcement Go Unnoticed?)