Can These Pot Stocks Survive the Next Stage of the Cannabis Industry?
Because of the infancy of the cannabis industry, things change very quickly. Since marijuana stocks became a widespread trend a few years ago, we have watched the cannabis industry evolve several times over. This evolution has been mostly positive for both pot stocks and those who invest in them. But, in order for the industry to see as much success as possible, things need to keep evolving. There are several ways in which the cannabis industry changes. For one, we have the shifting legislation. This is mostly a factor in the U.S. where cannabis is still federally illegal.
But, the laws for cannabis need to change around the world for the marketplace to reach its full potential. Second, the cannabis industry is shifting in terms of the products that are in demand, and the products that are being created. We have witnessed new forms of cannabis such as edibles and tinctures, begin to take hold amongst the greater public. Although these are not the only ways in which the cannabis industry has changed, these do seem to be the most prevalent. With that in mind, here are two marijuana stocks to watch for the near future.
The Largest Marijuana Stock of Them All
Canopy Growth Corp. (NYSE:CGC) is without a doubt the largest marijuana stock in the industry. The only rivals it has are the likes of Cronos Group Inc. (NASDAQ:CRON) and Tilray Inc. (NASDAQ:TLRY). In addition to being the largest pot stock by market cap, CGC stock also has the most free cash of any marijuana stock. At the end of its most recent quarter, CGC stock reported having as much as CA$34 million in sales. This is a jump up from its previous quarter of around 50% which is very substantial.
Of course, we have to consider that CGC stock is still one of the most volatile cannabis stocks in the industry. Other major marijuana stocks like Aphria Inc. (NYSE:APHA), have similar levels of volatility. Because of its sheer size, it looks as though CGC stock has a great chance at remaining in the top tier of the cannabis industry. But as usual, only time will tell what the future has in store for CGC stock. With that in mind, it does continue to be a pot stock to watch.
A More Stable Pot Stock to Watch
Innovative Industrial Properties Inc. (NYSE:IIPR) is considered to be one of the more stable marijuana stocks to watch. IIPR’s stability comes from its business model. For those who don’t know, IIPR operates as a REIT which means that it purchases real estate and then leases it out to those who want to grow or process cannabis. As of the end of August, IIPR stock was backed by as much as 61 properties spanning 16 states in the U.S.
This helps to show that it is a very broad based marijuana stock to watch. The company works off of mid and long term contracts that span anywhere from 5-10 years at a minimum. Because of this, many believe that IIPR stock has a great deal of long term potential. In addition, the company is required to pay out a majority of its earnings back to investors in the form of dividends. With that, many investors have become comfortable with the potential future of IIPR stock.