If you want to make money in the stock market in 2021, your best bet might be pot stocks.
Most marijuana stocks have started this year with substantial gains in the market. Pot stocks surged on January 6, as Democrats claimed control of both houses of Congress. This could pave the way for an expansion of legal marijuana sales. Plus, demand for cannabis has increased during the pandemic due to the increased number of people staying at home and using it recreationally. Overall, most things point to substantial market growth for the next few years. For investors, this might be a good time to start doing their due diligence on some of the top cannabis companies of 2020.
Canopy Growth (TSX:WEED)(NYSE:CGC) and Village Farms International (TSX:VFF)(NASDAQ:VFF) are two pot stocks that are performing well with high growth potential for this year. Let’s have a closer look at each of these two pot stocks.
Canopy Growth is the largest cannabis company by market value.
Among cannabis stocks, Canopy has faced a crisis and survived — a crucial advantage given that it belongs to an industry where many companies have yet to be tested. Canopy has struggled with lower-than-expected domestic demand, distribution issues, and a double whammy of losses and low revenue.
The company, based in Smith Falls, has since recovered well. Canopy shares have risen 46% over one year. Starting December 21, the company announced some big changes that it hopes will set it up for 2021. In particular, it cut ties with Canopy Rivers, which helped the company develop a key greenhouse infrastructure.
Canopy CEO David Klein is confident that the pot giant will be operating in the United States in about a year. Canopy will have an advantage over its Canadian counterparts in the United States, as it has warrants to acquire multi-state operator Acreage Holdings Inc. no later than 60 days after cannabis is federally cleared in the United States. The pot company also has a 21% stake in TerrAscend Corp., another major U.S. cannabis player.
Village Farms is also a great choice to play the pot rally. The Vancouver-based vegetable, cannabis, and hemp producer has soared by 118% over one year.
Village Farms was first a greenhouse operator, supplying tomatoes, peppers, and cucumbers. It was a rather boring business until it entered a joint venture with Emerald Health Therapeutics. Village Farms provided the greenhouses and Emerald provided the knowledge on growing cannabis.
In November, Village Farms acquitted 100% of the joint venture known as Pure Sunfarms.
Village Farms has a strong position in the Canadian market. It is also well positioned in the United States to supply cannabis as new laws come into play. Village Farms owns over 10 million square feet of greenhouse space in North America. The company has entered several supply agreements.
Village Farms announced on December 17 a further expansion of its Cannabis 2.0 offerings, including cannabis-infused gummy products based on White Rabbit OG’s proprietary technology.
Indeed, it owns approximately six million square feet of greenhouse in Texas — a massive turnkey option in the United States. Those are reasons to favour the stock.
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 Stephanie Bedard-Chateauneuf has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Village Farms International Inc. The Motley Fool owns shares of Village Farms International, Inc.