3 Top Cannabis Stocks to Watch This Fall

Canopy Growth Corp (TSX:WEED)(NYSE:CGC) and two other popular Canadian cannabis stocks are likely to see volatility over the coming weeks.

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From thriving to simply surviving, cannabis stocks are looking like less of a buy this week, as the vaping industry takes a big hit. Let’s take a look at a few of the top stocks in the legal marijuana space and see which of them might be worth snapping up at their lower prices.

The vaping controversy isn’t done yet

The news that Juul is under criminal investigation isn’t going to do the nascent vaping industry any good and comes at a time that everyone from the CDC to Donald Trump to the nation of India is condemning the craze. The Wall Street Journal has reported that California has launched a federal criminal investigation into the e-cig company.

Restrictions on how edibles are branded may also weigh on edibles in a way that American markets don’t face, making growth in the U.S. a potentially more appetizing play that the Canadian market. Indeed, the whole U.S. market for cannabis may eventually be more profitable if and when federal legalization kicks in.

Three Canadian cannabis stocks taking heavy losses

Canopy Growth is down 13.76% in the last five days, as investors wring their hands about the bottom falling out of the vaping industry pretty much over night. The knife isn’t going to stop falling yet, either. This is a top stock to watch for the bottom — and expect it to bounce back.

Canopy’s geographical spread and sturdy medicinal marijuana business helps make Canopy Growth a safer bet than many of its peers, plus its deal to buy Acreage Holdings once the U.S. legalizes weed will open up an extremely strong market south of the border. The coming months could see Canopy Growth losing market share to a competitor as the legal cannabis industry continues to find its feet.

Aphria is down 7.73% in the last five-day period, making it another stock to watch for the bottom. Again, its Aphria’s medical marijuana segment that gives this stock a bit of backbone. The stock has had a great year, and things could improve as Aphria positions itself to steal market share from the likes of Canopy Growth.

A quarter-on-quarter leap in revenue of 75% at the start of the summer put Aphria way ahead of the pack when it comes to sales. A high output capacity also makes the stock an attractive play for productivity, with an annual yield of 100,000 kg.

Cronos Group suffered the worst loss of the three stocks listed here, down 14.67% on vaping woes, as its investor Altria takes a battering due to its heavy exposure to Juul. Cronos is dangerously exposed to the vaping fiasco thanks to the 45% stake that Altria has in the cannabis company and could be another falling knife in the cannabis space.

The bottom line

While 2018 saw a lot of headline-generating deals that helped drive investment in the cannabis sector, 2019 has seen fewer. The future of cannabis may lie in mergers and acquisitions, as concerns surrounding oversupply weigh on the sector. Stocks to watch include Aphria, which is gaining traction, and Cronos, which may have further yet to fall.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.

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