The holidays are coming, and with them the chance for upside in Canada’s hottest new industry. Cannabis 2.0 will be put to the test as the full range of vapes, edibles, and cannabis drinks test consumer demand.
Here are two of the top stocks to stash in your stocking in for December.
Cannabis 2.0 will test the market
Canopy Growth (TSX:WEED)(NYSE:CGC) CEO Mark Zekulin sees Cannabis 2.0 as extension of the company’s drive and commitment to high quality products: “Since our first medical sale in 2014, we’ve been focused on innovation and quality, and now we’re expanding that with the launch of our game-changing recreational beverages, chocolates, and vapes.”
In an industry likely to support three to five big players, the Drake-partnered pot producer is a sensible choice for a new cannabis investor.
The holiday period will be make or break time for legal cannabis, and Canopy is in a particularly strong position to come out on the other side as a market leader. From distilled Cannabis to vapes and chocolates, Canopy has a diversified but focused approach.
While vape products remain a key part of Cannabis 2.0, the recent health scare has put something of a dent in the perception of the craze.
Perhaps the more exciting — and potentially lucrative — aspect of the new cannabis asset types is infused beverages. Canopy’s Distilled Cannabis line will have a chance to shine over the coming weeks and months as the market for legal marijuana drinks is finally tested.
The next best bet for market dominance
Bullish on the performance of Cannabis 2.0 products and emboldened that the knife has stopped falling at last, investors initially pushed HEXO (TSX:HEXO)(NYSE:HEXO) up by more than 10% this week, although those gains had evaporated heading into the weekend. The stock is a buy for investors keen to see strong brand consciousness.
Ontario also got its first taste of HEXO’s cut-price brand, Original Stash, as it was rolled out in the province for Black Friday. The holiday season will be a crucial testing ground for the new approach.
Down by 50% in the last 12 months, pundits are asking whether the stock has finally bottomed out. Investors bullish on the market penetration move will have to weigh up the pros and cons.
Sébastien St-Louis has pinpointed why countering the black market by targeting cannabis product prices is key, however: “Original Stash is providing consumers with ‘quality weed at legit prices.’
Consistent, reliable and controlled products like this can play a major role in achieving the goals we set out nationally by legalizing cannabis just over a year ago: eliminating the illicit market and protecting public health and safety.”
The bottom line
Canopy is a solid choice for investors seeking brand consciousness. While the holiday season will offer a taste of just how impactful such brand targeting will be in the real world, there are some big names attached to Canopy that should interest investors seeking cultural nous.
From Drake and Snoop Dogg to Green House Seeds and Constellation Brands, Canopy investors have a culturally savvy play in the pot space.
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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. The Motley Fool recommends HEXO. and HEXO.