Among the many growing stocks in the legal production and sale of cannabis, there are three US stocks that are showing solid growth and great prospects. These stocks could double in size after US cannabis legalization is passed at the federal level.
Cannabis stocks and infrastructure companies rallied sharply amid expectations of federal legalization of cannabis with the arrival of President Joe Biden and the Democrats gaining a majority in Congress.
In addition, during the November 2020 US elections, residents of five states: Arizona, New Jersey, South Dakota, Mississippi and Montana also voted to legalize cannabis use regardless of the form of intake.
The cannabis industry is one of the fastest growing, and the products are used both for medical purposes and in the field of cosmetics, food, vaping (e-cigarette smoking) and just for recreation – such cannabis is called recreational.
The geography of the use of medical and recreational cannabis is growing every year, while the US market is considered as the richest and most promising.
Here are three stocks in the US cannabis industry that have already performed solidly and for which analysts are giving high growth forecasts.
1. Cresco Labs sells medical cannabis in nine US states
Cresco Labs is California’s leading cannabis wholesaler. Cresco is a leader in its home state of Illinois and also has offices in eight other states.
Cresco Labs is listed on the US OTC markets under the ticker CRLBF, with a market capitalization of approximately $ 7 billion.
Over the past two years, Cresco shares are up more than 270%, showing strong gains since the second half of 2020, continuing their strong pace in 2021.
Below is a comparison chart of Cresco Labs stock (blue line) versus the broad S&P 500 index (black line) over the past 5 years.
Cresco recently received a license to sell recreational cannabis in Arizona, a state where it already supplies medical cannabis. In addition, Cresco’s acquisition of Florida rival Bluma Wellness gives the company the opportunity to expand into the state’s fast-growing medical cannabis market.
Some analysts believe Cresco shares will at least double this year.
2. GrowGeneration is the fastest growing cannabis company in 2020
GrowGeneration is a supplier to cannabis growers, owning the largest chain of retail stores for hydroponic (growing crops without soil) and organic gardening equipment.
GrowGeneration has approximately 46 stores from approximately 1,000 hydroponics stores in the United States and has a presence in Arizona and Michigan.
At the moment, GrowGeneration’s goal is to own 55 stores by the end of 2021 and increase revenues by at least 75%.
GrowGeneration is listed on the NASDAQ under the GRWG ticker and has grown by over 800% over the past 12 months.
GrowGeneration had a market cap of nearly $ 3 billion as of the close of trading on Friday, Feb.19.
GrowGeneration has two clear paths to sustainable long-term growth: expanding online sales of hydroponics equipment and opening new stores in other states that have recently legalized cannabis for medical or recreational purposes, or are likely to do so soon.
3. Shares of Innovative Industrial Properties – a good opportunity to invest in the cannabis industry
Innovative Industrial Properties (IIPR) is a real estate investment fund (REIT) for the medical cannabis industry. Like most REITs, IIPs buy properties and then rent them out to generate a steady income.
What makes IIPR special is that it is the first publicly traded company on the NYSE to provide real estate capital for the medical cannabis industry.
The company currently owns 67 properties in 17 states with an average remaining lease of about 16.7 years.
IIPR shares are up 100.5% in the past 12 months and 17.2% since early 2021, with a market cap of $ 5 billion as of Friday’s close.
In addition, Innovative Industrial Properties offers robust and fast-growing dividends.
IIPR services will remain attractive to cannabis growers until the US government passes federal legislation to make it easy for them to obtain bank loans.
However, for now, the overall expansion of the US cannabis market will be more than enough to offset any IIPR problems.
IIP should have no problem continuing to add new properties, while the company will generate significant growth in profits and dividends.