2 Marijuana Stocks That Could Dethrone Canopy (TSX:WEED)

Cannabis investors seem to be shifting their attention away from Canopy Growth stock to two industry rivals. Tilray stock and Hexo stock are well positioned to compete with and dethrone the acknowledged market leader.

| More on:
Cannabis stocks have fallen.
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The overall sentiment in Canopy Growth (TSX:WEED)(NYSE:CGC) is currently very low. After peaking to $66.21 on February 10, 2021, the stock of the acknowledged industry leader began its descent. As of May 26, 2021, WEED trades at only $29.49 per share, or a significant 55.5% drop from nearly four months ago.

Canopy Growth’s leadership position may not hold for long because Tilray (TSX:TLRY)(NASDAQ:TLRY) and Hexo (TSX:HEXO)(NYSE:HEXO) appear to be more attractive investment options. The two industry rivals can take over the throne.

The key to the lucrative U.S. market

Most Canadian cannabis producers are waiting for the federal legalization of marijuana in the United States. However, there’s no definite timetable for when marijuana will be decriminalized or legalized federally across the border.

Two U.S. congressmen recently filed a bill called the Common-Sense Cannabis Reform for Veterans, Small Businesses, and Medical Professionals Act. The bill could be the key for Canadian cannabis companies to do business or enter the lucrative U.S. market finally.

According to sponsors, representatives Dave Joyce (Ohio) and Don Young (Alaska), the bill aims to the create a federal pre-emption that would protect financial institutions and other businesses in non-cannabis legal states for them to service cannabis companies. The proposal is the latest push to remove marijuana from the controlled substances list.

Aphria-Tilray merger

Tilray shares began trading on the Toronto Stock Exchange (TSX) on May 5, 2021, following the approved merger of Aphria and Tilray. The combined company has a market capitalization of $8.96 billion versus Canopy Growth’s $11.27 billion. Aphria’s chairman and CEO, Irwin D. Simon, is the captain of the ship.

Aphria is the surviving entity, although the new company trades under the Tilray name on the TSX and NYSE. With the merger comes Tilray’s medical business in Australia and Europe. It combines with Aphria’s recreational businesses in Canada. Other revenue drivers include Tilray’s Manitoba Harvest and Aphria’s SweetWater. Manitoba sells hemp granola and CBD products, while SweetWater is a leading cannabis lifestyle branded craft brewer.

Tilray is the global pioneer in cannabis research, cultivation, production, and distribution. Aphria focuses on acquiring brands in the consumer products space, so it could grow beyond cannabis. The merger is the biggest in the industry, revenue-wise. You can purchase Tilray at $20.16 per share.

#1 market share

Hexo (+65.5%) outperforms Canopy Growth (-9.8%) in the stock market year to date. The weed stock’s trailing one-year price return is 99.23% versus Canopy’s 6.58%. Moreover, market analysts see a potential upside of 81.11% from its current share price of $7.73 to $14 in the next 12 months.

The $946.66 million cannabis producer from Kanata is making the right moves in 2021. It will acquire Redecan, a licensed producer with a robust brand portfolio, for $925 million. Management’s goal is to hold the number one market share in Canadian recreational cannabis, particularly in Canada’s largest markets.

While Constellation Brands is a significant shareholder of Canopy Growth, Hexo formed a joint venture (JV) with Molson Coors Breweries called Truss. The JV is another ticket to profitability. Like Canopy, Tilray eyes the cannabis-laced beverage market, which should be a massive industry in a few years.

Canada versus the U.S.

Canopy Growth, Tilray, and Hexo will battle for market supremacy. However, expect intense competition, because it’s also a race between Canadian and American cannabis producers. The result should be a vibrant cannabis industry.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool recommends HEXO. and HEXO.

More on Cannabis Stocks

edit Cannabis leaves of a plant on a dark background
Cannabis Stocks

Canopy Growth Stock: The Only Cannabis Stock to Consider Long Term

The cannabis stock industry remains an incredibly high risk one, but Canopy Growth (TSX:WEED)(NYSE:CGC) stock provides the best opportunity for…

Read more »

edit Cannabis leaves of a plant on a dark background
Cannabis Stocks

Should You Stay Away From HEXO Stock?

HEXO (TSX:HEXO)(NASDAQ:HEXO) stock is on a downward spiral, and there is little hope it is going to recover soon.

Read more »

edit Cannabis leaves of a plant on a dark background
Cannabis Stocks

Why Did Aurora Cannabis (TSX:ACB) Stock Plunge 75% in 2022?

A prominent cannabis stock has plunged by 75% in 2022, as the company’s losses continue to mount in the face…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Fire & Flower: A Small Pot Stock Poised for Strong Growth

Fire & Flower is a cannabis retailer well-positioned for growth thanks to its digital and delivery initiatives.

Read more »

edit Jars of marijuana
Cannabis Stocks

Why Aurora Cannabis (TSX:ACB) Stock Is Sinking This Week

Starting another round of capital raising has hurt investor sentiments, and the Canadian cannabis giant’s performance on the stock market…

Read more »

edit Jars of marijuana
Cannabis Stocks

Why Canopy Growth (TSX:WEED) Stock Plunged 19% Last Week

Canopy Growth Corp. (TSX:WEED)(NASDAQ:CGC) stock has plunged after the release of its final fiscal 2022 results.

Read more »

Cannabis stocks have fallen.
Cannabis Stocks

Why Aurora Cannabis (TSX:ACB) Stock Tanked 45% Last Week

There's no respite for Aurora Cannabis investors!

Read more »

Money growing in soil , Business success concept.
Cannabis Stocks

TFSA Investors: This Undervalued Gem Could Turn $6,000 Into $25,000

Here's why TFSA investors can hold undervalued growth stocks such as Verano in their portfolios right now.

Read more »