Two of the top potential growth sectors on the TSX are still relatively good value for money. With cannabis having cratered this year, and the space industry yet to get off the ground, investors looking for ground level investments have some very strong Canadian stocks to go for right now.
Cannabis investors could still see high returns
Canopy Growth (TSX:WEED)(NYSE:CGC) has had a rough few months by anybody’s standards, including a dip caused by the news that Constellation Brands would not be pumping more capital into its cannabis investment. However, the reason now becomes clear: Constellation Brands was clearly confident that Canopy was already solvent enough to carry out its vision for market dominance.
However, it wasn’t the only sign that cannabis investors misread. By positioning its CFO, David Klein, as the chairman of Canopy’s board, the stage was set for transition to leadership. Some investors are bullish that a takeover bid may even be next.
Selling for around $28 a share, Canopy is well below its high target price of $60. For investors seeking to double their money, then, bullish stockholders might expect to see 200% gains if Canopy actualizes its potential value.
With analysts estimating a conservative legal marijuana market value of US$66.3 billion over the next five years, cannabis investors should be thinking of taking long positions in competitive market leaders. With its canny management style, Canopy is looking like just the right stock for a high-growth strategy.
For stratospheric gains, watch this space
If investors can afford to add a bit of risk to a portfolio, Maxar Technologies is a prime example of a potentially wide ride for rocketing upside.
With an optimistic $20 target, investors who buy while the stock is beaten up could be looking at a meaningful return in the region of 142%. However, given the huge growth potential of the satellite servicing industry – a brand-new area that Maxar is leading in conjunction with NASA — the actual return on capital could literally be stratospheric.
A combination of Maxar, Rio Tinto, Virgin Galactic, and Amazon is a comprehensive first start for a mini space industry portfolio. Investors seeking further exposure in blue-chip stocks that provide access to this high-growth sector could think about such names as Northrop Grumman and Boeing, though the latter company may still face some headwinds from holdups in its commercial aviation segment in 2020.
For investors gazing into the crystal ball, any business that deals with fuel, accommodation, healthcare, and consumer staples at scale is going to be a play for the space industry as it takes off. From tourism to exploration, manufacturing to extraterrestrial resource extraction, every major industry could end up having a space segment.
The bottom line
In terms of potential for growth, both cannabis and the space industry could very well have masses of upside. Investors looking for the biggest return on investment and wide financial horizons have the opportunity to stash battered shares in their long-range portfolios ahead of time, with both Canopy and Maxar trading well below their potential targets by the end of the new decade.
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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.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool owns shares of Virgin Galactic Holdings Inc. The Motley Fool recommends Constellation Brands and MAXAR TECHNOLOGIES LTD.