Investing In Top Marijuana Stocks In 2021
At the present time, there are many different marijuana stocks that will give investors exposure to the growing cannabis industry. Since the pandemic, the cannabis market has managed to escape economic hardship and begin to flourish in the US. Now in 2021 most leading cannabis companies are reporting strong earnings and are still experiencing market growth this year. With more states legalizing cannabis this year, the industry is growing rapidly right now.
In addition, lawmakers in Congress are voting on the MORE Act this month and could make cannabis federally legal throughout the United States in 2021. This would probably reignite the cannabis sector creating upward momentum for investors. So, is now the time to find top marijuana stocks to buy? Although cannabis stocks have delivered gains for investors in 2021, they have also shown their market volatility. For those that don’t know top marijuana stocks are known for being some of the most volatile stocks in the market.
But one area that has shown some more stability for traders than regular marijuana stocks is ancillary cannabis stocks. Ancillary companies are those companies that support the cannabis industry without touching the actual cannabis plant. In general, these companies have shown more stability than the vertically integrated cannabis stocks. Some of these companies have even delivered higher returns for investors in 2020 and the first quarter of 2021.
Ancillary Cannabis Stocks In 2021
One example of an ancillary cannabis company that has grown significantly in the past few years is GrowGeneration Corp. (NASDAQ:GRWG). A leading supplier of hydroponic equipment and organic gardening centers the company reported a record revenue increase of 173% to $90 million in the first quarter of 2021. Currently, with 55 stores across 12 states, GrowGen raised its revenue guidance for 2021 to $450-$470 million and adjusted EBITDA to $54-$58 million.
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As the marijuana industry grows so will the demand for the necessary equipment and products to produce cannabis. There are other companies that contribute to cannabis industry growth in many different ways. In some cases, they contribute packaging and accessories, and others give cannabis its online market presence. With this in mind, we can research some of these companies to find the best options for your watchlist.
Marijuana Stocks To Watch
- Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM)
- Silver Spike Acquisition Corp. (NASDAQ:SSPK)
Hydrofarm Holdings Group, Inc.
Hydrofarm Holdings Group, Inc. is a leading distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture. Becoming a publicly-traded company in 2020 Hydrofarms came in as a company that has been in business for over 40 years helping growers in the US and Canada. Primarily, the company manufactures and sells high-intensity grow lights, climate control solutions, and has a large portfolio of branded products.
In May Hydrofarms delivered the first quarter of 2021 financials with net sales increasing 66.5% to 111.4 million. Additionally, the company saw gross profit increase by 100.8% to $23.2 million or 20.8% of net sales. Also, the company revised its full-year 2021 outlook to net sales growth of 30-40% and adjusted EBITDA of $36-$42 million. On June 1st the company completed the acquisition of House & Garden and Mad Farmers brands. This transaction follows the recent acquisition of HEAVY 16 and is part of the company’s strategic efforts to pick up key CEA products.
HYFM stock closed on June 8th at $59.46 up 13.08% year to date. In February the stock saw a high of $95.48 and is down 7.38% in the last month. According to analysts at CNN Business HYFM stock has a 12-month median price target of $74.50 per share. This would represent an increase of 25.48% from current price levels. For this reason, HYFM stock is a top ancillary marijuana stock to add to your watchlist in June.
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Silver Spike Acquisition Corp (Weedmaps)
Known in the online world as Weedmaps, Silver Spike Acquisition Corp. is the SPAC that brought WM Holdings Company public in December 2020. If you’re not familiar with the platform Weedmaps, it’s an online listing marketplace for cannabis consumers and cannabis companies. Primarily, the company has built one of the largest online markets for connecting cannabis companies to new consumers and vice versa. Valued at having an estimated $160 million in revenue in 2020 the company has a market valuation of $1.5 billion.
At the present time, Weedmaps has an estimated 10 million monthly active users and approximately 18,000 cannabis businesses listed in its registry. Weedmaps client base includes over 55% of retail license holders in all cannabis markets. As cannabis sales move online and deliveries and pickups increase, Weedmaps could continue helping the industry connect online.
SSPK stock closed on June 8th at $18.15 up 42.13% year to date. In the past five days, SSPK stock has increased by 14.29%. In February SSPK stock saw a high of $29.50 and is showing some upward momentum in the market. According to analysts at Wallet Investor SSPK stock has a 1-year forecast price target of $25.32 per share. With this in mind, SSPK could be one of the top cannabis stocks to invest in for June 2021.
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