October 17th just shook the world – it’s the biggest day in the history of the cannabis industry and cannabis stocks are ready to soar.
October 17th was the day that Canada became the first developed nation in the world to legalize cannabis!
This game changer unleashed a multi-billion dollar industry overnight.
Market-research firm Deloitte is predicting that Canada’s legal cannabis industry will generate sales between $5 billion and $6 billion in 2019.
CIBC, one of Canada’s largest banks, predicts that cannabis sales will hit $6.5 billion by 2020, eclipsing the $5.1 billion that Canadians spent on liquor in 2017.
This legal breakthrough has created a once-in-a-lifetime opportunity for investors.
A small group of Canadian cannabis companies have been granted exclusive permits by Health Canada to grow, sell, and export cannabis.
Scoring these permits is a lot like winning the lottery.
These lucky companies will be scooping up billions in new sales, and it could easily send shares soaring into new all-time highs.
However, there’s a catch.
Investors must know which cannabis stocks to buy and which ones to avoid. While some cannabis stocks will benefit from legalization, others will suffer.
The companies that will benefit the most will be:
- Early permit winners and early industry leaders.
- Low-cost providers against smaller competition.
- Early and growing international presence.
- Strategic partnerships with larger, global consumer brands.
Below is a list of three early Canadian cannabis industry leaders that should see mega moves as a result of Canada’s historic movement.
These are all core holdings in Cannabis Stock Trades’s diverse cannabis portfolio with a medium to long-term outlook. I expect all three to get a big boost when Canada goes legal.
Canopy Growth Corp (TSX: WEED, NYSE: CGC)
Canopy is a direct play on Canada’s legalization. Canopy is already the largest cannabis company in Canada and the world. It’s also one of the lowest cost cannabis providers and one with the most international exposure. After a string of acquisitions in the last two years, Canopy is now operating in 11 countries.
Canopy recently surged into a new all-time high and sent the entire cannabis sector soaring after announcing a record $3.8 billion investment from Constellation Brands (NYSE: STZ), the third largest beer company in Canada.
This huge partnership will help grow its product portfolio and expand into dozens of new international markets. As part of the deal, Canopy also is allocating $1 billion to invest in international acquisitions.
Canopy isn’t just a leader in Canada – the company has its eye on becoming the number one global leader.
It’s an ambitious goal, but Canopy has proven success of executing a high-growth business plan.
Canopy shares surged into a new all-time high after announcing its $3.8 billion deal with Constellation. I expect Canopy to close the year at a new all-time high.
Aurora Cannabis (TSX: ACB, OTC: ACBFF)
Aurora is also ready to cash in. Like Canopy, Aurora is an early cannabis industry leader. It’s one of the largest cannabis companies in the world, one of the lowest-cost producers with international reach.
Aurora has been rapidly expanding cannabis production capacity over the last few months.
Aurora is in the final stages of completing its Aurora Sky facility, a 1 million square foot, state of the art cannabis greenhouse strategically located near the Edmonton International Airport.
This location close to a major international airport plays perfectly into Aurora’s international business model. Aurora is an early leader in some of the fastest growing international cannabis markets, including Germany, Italy, Australia, and Columbia.
Aurora’s shares jumped more than 20% on September 17 after revealing it was in talks to develop cannabis-infused drinks with Coca-Cola (NYSE: KO), one of the most recognized consumer brands in the world.
If Aurora announces a deal with Coke it should be another huge jolt for Aurora shares.
Despite the recent 20% jump, Aurora is still trading 35% below the 52-week high.
Looking forward, this is another cannabis stock I expect to close the year trading at an all-time high.
Hexo Company (TSX: HEXO, OTC: HYYDF)
Hexo is another early industry leader with all four key traits to flourish on Canada’s huge move.
With a market cap of $1.25 billion, Hexo is one of the largest companies in the young cannabis industry. It’s one of the lowest-cost producers. And perhaps most important, Hexo is part of a very exclusive club with Canopy. Hexo is the only other cannabis company, other than Canopy, to sign a partnership with a global alcohol leader.
On August 1, Hexo announced it had entered into a partnership with Coors Brewing Company (NYSE: TAP, TSX: TPX) to develop cannabis-infused beverages. The two companies also revealed that they will create a new company for the partnership.
This partnership should turbocharge Hexo. It will expand its products offerings and have access to a partner with global distribution network.
On the chart, Hexo has been following Canopy, recently jumping into a new all-time high. Hexo has tons of upward momentum and I expect it to continue.
Cannabis Stock Trades Will Help you Manage Your Cannabis Portfolio
As you can see, the opportunity in legal cannabis is enormous – the kind of opportunity that only comes along once in a lifetime. Investors passing this up could regret it for the rest of their lives.
But like every young industry, the cannabis industry is prone to extreme volatility. It’s also difficult to find reliable, unbiased research.
Investors must know how to navigate these challenges in order to be successful.
As a member of Cannabis Stock Trades, we’ll take your cannabis portfolio to the next level with hand-picked cannabis stock recommendations and unbiased research.
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Don’t wait to join us! Things are just heating up.
Editor, Cannabis Stock Trades
About the Author & Cannabis Stock Trades
Michael Vodicka is a globally syndicated equity analyst with more than 20 years of experience in trading and investing and the editor of Cannabis Stock Trades. Michael and his wealth management clients have been investing in cannabis stocks since 2013.