The Motley Fool

This Pot Stock Has Soared Past Canopy Growth Corp (TSX:WEED)

While pot stocks have been slowing down lately, that doesn’t mean the opportunity to get a good return isn’t there anymore. However, how much of a return you can still earn with an established, well-known stock like Canopy Growth (TSX:WEED)(NYSE:CGC) is debatable, although it has been rising lately.

Instead, the Canadian Securities Exchange can offer some attractive up-and-coming stocks that are still in their early growth stages or are based in the U.S. and can’t list on the TSX due to the legal issues surrounding cannabis south of the border.

Pot stocks on that exchange have been doing well, and one in particular has quietly been soaring in value. MedMen Enterprises (CNSX:MMEN) recently launched on the TSX, and in the past three months it has soared by more than 80%. Even in the past month, while Canopy Growth has declined by more than 10%, MedMen has soared by nearly 40%. Aurora Cannabis, which is often more volatile, has also dropped more than 25% in just the past month of trading.

The big names of the TSX have been struggling, and a stock like MedMen still has many growth opportunities ahead of it.

What makes MedMen special?

What’s appealing about MedMen is that the company has a presence in many U.S. states, and a recent acquisition will only add to that tally. Gaining a large foothold across the U.S. is very challenging because transporting across state lines is illegal, which means that a company will have to have operations in every state that it wants to sell its products in.

This makes acquisition the quickest way for a company to expand its business. When the time comes that marijuana inevitably gets legalized in the U.S., a company like MedMen will have a lot of value and could be a prime acquisition target of a big pharmaceutical or alcohol company looking to jump into the industry.

We’ve already seen a lot of interest from other industries, and a stock like MedMen could offer a lot of value to prospective buyers. Unfortunately, the legality of cannabis remains a big hurdle, and that has kept many big brands in the sidelines thus far.

As more states move to legalize cannabis, there will be even more opportunities for MedMen to expand into, and that could make the stock an even better buy. While the stock has risen a lot in value lately, MedMen is still in the very early stages of its growth. And with the stock being only listed on the CNSX, the pool of investors it has access to will be limited, and it could take off when the day comes that it makes the move onto a big exchange like the TSX or NYSE.

Many other pot stocks to choose from

MedMen is one of the more popular options on the CNSX, but it’s not hard to find other pot stocks as well. But investors should be aware that while the opportunities are significant, so too are the risks.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor David Jagielski has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.