Market Overview

5 Hot Pot Stocks In 2018 And 5 More To Watch The Rest Of The Year

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5 Hot Pot Stocks In 2018 And 5 More To Watch The Rest Of The Year

The U.S. Marijuana Index, which hit a trough at 72.93 on April 3, has since recovered, with the Canadian Senate's June 19 ratification of the bill to legalize recreational pot serving as a shot in the arm for all marijuana stocks.

Prime Minister Justin Trudeau announced Oct. 17 as the official date when recreational marijuana can be consumed without inviting legal penalties.

Recreational marijuana will fetch Canada $4.3 billion in sales in the first year following the legalization, according to CNN, which quoted research by Deloitte.

In the year-to-date period, the index has added a mere 0.8 percent compared to the 1.6-percent gain in the S&P 500 Index.

See Also: How To invest In Marijuana Stocks

The Index's Year-To-Date Performance

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Source: Marijuana Index.com

Most U.S. states permit limited use of medical marijuana under certain circumstances, while nine states and the District of Columbia have legalized recreational marijuana. 

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Source: Governing.com

When the regulatory environment eases, the U.S. represents vast potential for marijuana stakeholders. The U.S. legal cannabis market is expected to grow from $8.5 billion in 2017 to $11 billion in 2018, according to the  latest estimates by Arcview Market Research and BDS Analytics.

By 2022, spending is expected to reach $23.4 billion, growing by a CAGR of 22 percent from 2018 to 2022.

Revisiting The Picks

At the start of the year, Benzinga alerted investors to five big opportunities in the marijuana space. This is how each of the stocks has performed through June 30:

  • GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH): up 5.7 percent.
  • Canopy Growth Corp (NYSE: CGC): up 24 percent; uplisted to NYSE on May 23.
  • Aphria Inc (OTC: APHQF): down 39 percent, overvaluation concerns weighed on the stock.
  • MedReleaf Corp (OTC: MEDFF): up 22 percent. 
  • Scotts Miracle-Gro Co NYSE: SMG): down 21 percent. 

5 Best Performers Year-To-Date

The five best performers with market caps over $200 million are:

  • MARIMED Inc/SH SH (OTC: MRMD): up 235 percent.
  • iAnthus Capital Holdings Inc (OTC: ITHUF): up 154 percent
  • OrganiGram Holdings Inc (OTC: OGRMF): up 25 percent.
  • Canopy Growth: up 24 percent.
  • MedReleaf: up 22 percent.

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5 Pot Stocks That Could Take Off In The Second Half

As the market enters the second half of the year, here's a look at a few marijuana stocks that could make waves in the market. The picks were screened based on the following criteria and come in addition to the five stocks Benzinga highlighted at the start of the year:

  • Market cap north of $200 million.
  • Average volume over 15,000.
  • Positive sales.
  • Debt-to-capital ratio of less than 2 percent.
  • The presence of upcoming catalysts.

Organigram Poised For Bumper Harvest

Organigram Holdings, which produces and sells medical marijuana in Canada, has its shares listed on the TSX Venture Exchange and the over-the-counter market in the U.S. It's one of the profitable marijuana growers.

In the recent second quarter, the company reported sales totaling the U.S. dollar equivalent of $2.4 million, up 123 percent year-over-year, and net income of $823,880. The volume of cannabis oil sold jumped about 300 percent.

Organigram expects production costs to fall further to a record low in Q3, thanks to record yields per plant and production efficiencies.

Organigram has struck partnerships that should help its expansion into Germany and Australia and signed supply agreements with the provinces of New Brunswick and Prince Edward Island for recreational marijuana.

Innovative Industrial: Financing The Pot Industry

Innovative Industrial Properties Inc (NYSE: IIPR) is a REIT that operates in the medical cannabis industry.

Innovative Industrial reported Q1 total revenues of $2.764 million, more than double from a year ago, and adjusted funds from operations of 23 cents per share.

Cronos Fires On All Cylinders

Cronos Group Inc (NASDAQ: CRON) has been expanding its production capacity higher from 6,650 kg annually. This would help the company take advantage of the emerging opportunity presented by the legalization of recreational marijuana.

Cronos shares may also benefit from institutional investments from Wall Street firms due its February uplisting to the Nasdaq.

The company has an ongoing relationship with Constellation Brands, Inc. (NYSE: STZ), with the latter picking up a 9.9-percent stake in the former.

Insys Adopts Cannabis Focus

Insys Therapeutics Inc (NASDAQ: INSY), a company engaged in the development of pharmaceutical cannabinoids and spray technology, recently announced a new R&D vision that shifts resources from opioids to cannabinoids. The company has three ongoing clinical trials: a late-stage study in infantile spasms, a mid-study in childhood absence epilepsy and another late-stage study in Prader-Willi syndrome.

Insys said it intends to collaborate on autism research with UC San Diego's Center for Medicinal Cannabis Research.

Kush Bottles: A Supplier Play

Kush Bottles Inc (OTC: KSHB), a supplier of supplies and packaging mainly to marijuana growers and dispensaries, is another way play on the anticipated marijuana boom. The company has notched strong revenue growth in recent quarters.

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