The cannabis growth sector is experiencing a significant shift in the regulatory landscape, marked by the U.S. Drug Enforcement Administration’s reassessment of marijuana’s Schedule 1 status and the Health and Homeland Security’s recommendation to soften federal restrictions. Coupled with President Biden’s recent pardons for marijuana offenses, this regulatory pivot has propelled the sector’s stocks to new heights, signaling an opportune moment for investment consideration.
The American cannabis industry is poised for substantial growth, with the U.S. market projected to surge at a compound annual growth rate (CAGR) of 24.03%, reaching a staggering $46.90 billion by 2027. Consequently, 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 (OTCMKTS:GTBIF) has been one of the consistently profitable businesses in its niche, riding the positive momentum behind the sector, up a remarkable 97% in the past six months. The company attracts a strong buy rating from TipRanks analysts and a promising 16.15% upside potential. The third quarter showed a 9% sequential revenue increase, reaching $275 million, and a GAAP net income of $11 million. 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.
Molson Coors (NYSE:TAP) presents an attractive value opportunity, diversifying in the cannabis sector. With low 11-times forward earnings, the stock appeals to investors seeking a favorable risk-reward profile. The company’s third-quarter performance adds to this upbeat narrative, with non-GAAP earnings per share of $1.92, outpacing expectations by 38 cents, and revenue climbing to $3.29 billion, a 12.4% increase year over year (YOY). Net sales per hectoliter surged by 8.9%, showcasing the company’s strong pricing power and market adaptability. Molson Coors and Anheuser-Busch have eclipsed the S&P 500 and consumer staples indices over the past year, steering investor interest toward this top cannabis stock.
Innovative Industrial Properties (NYSE:IIPR) is arguably the smartest play on the burgeoning cannabis space, boasting an impeccable record, collecting over 97% of rents consistently. The company reported Q3 funds from operations of $2.09, surpassing expectations by four cents, and revenue of $77.82 million, reflecting a substantial 9.8% YOY bump, beating estimates by $1.26 million. 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.
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