Today we’re going to take a look at four cannabis stocks that made the TSX30. This is the second year that the showcase initiative has released its list, and comparisons with last year’s winners are illuminating. Today we will catch up with last year’s winner and find out which names made the cut as well as one that was conspicuously absent.
How the mighty pot stocks have fallen
Canopy Growth (TSX:WEED)(NYSE:CGC) has returned 176% in the last three years. So far, so good. But sitting way down at 18th place on this year’s TSX30 list, Canopy is a shadow of its former self in terms of share price growth. Last year saw Canopy take the number one spot, with three-year share price appreciation of 1,823%. Worse than that, though, Canopy has actually lost 37.3% year over year.
Growth-focused investors should look at names that have overtaken Canopy on the growth list. Consider investing instead in Cronos Group, up 378% in three years. It took bronze in this year’s TSX30, making it the fastest-growing cannabis stock on the TSX in the last three years. Next down the list, Neptune Wellness Solutions has seen share price appreciation of 245% since 2017. Neptune clocked in at number 11.
Up 199%, Village Farms International (TSX:VFF)(NYSE:VFF) gets an honourable mention though it is not just a cannabis stock. This is also a play for consumer staples via vegetable production. This name even packs a little energy production on the side. The news that Village Farms is buying the remaining stake in Pure Sunfarms should also be of interest to investors.
A cannabis industry still awash with risk
Investors should be aware that Village Farms has been generating some big one-day moves of late, though. A couple of weeks back, Village Farms saw a near 10% boost. This week started badly, though, with Village Farms ditching 9.6% in a single day of trading. Cronos lost 2% in Monday’s market selloff, while Neptune ditched 3.6%, and Canopy lost 3.1%. Cannabis stocks are still not for the fainthearted.
Also, take that share price growth in context. The inclusion of Canopy on this list owes more to the years 2017-2019 than it does to the last 12 months’ tire fire of a performance. Canopy may be up by almost 180% in three years, but its year-on-year performance is negative. So could next year’s TSX30 see Canopy absent altogether? It’s happened to other names, such as Aphria. Last year, Aphria was number six on the TSX30. This year, it’s absent.
So which stocks should cannabis investors be eyeing at the moment? Value opportunities have presented themselves as a barrage of market forces converged to knock the shine off pot stocks. But the reversal of these factors could see this industry improving. An economic recovery, an end to the pandemic, and a more comprehensive retail environment could see cannabis stocks on the road to recovery.
Canopy stands out as a market leader in this space, bringing celebrity endorsements and corporate nous to the table. While its recent share price performance leaves something to be desired, this opens up a value opportunity for contrarians on the lookout for beaten-up quality.
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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 owns shares of Village Farms International, Inc.