The Investment Window Is Closing on 3 Big-Name Cannabis Stocks

Even though short-term trends may prove risky investments, suitable holdings during the right window can do more for your portfolio in a year than some stocks might in a decade.

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December hasn’t been a good month for the healthcare sector in Canada. The index has fallen over 15% since the beginning of the month. The performance of the sector as a whole, and marijuana companies in particular, is in stark contrast to the performance in October and November.

However, the last time the index was as low as it is now, we saw roughly one-and-a-half months of solid growth, pushing many cannabis stocks up quite a bit. And if another such sprint is coming, consider buying now before the trend shifts.

A new giant

Tilray (TSX:TLRY) is an old company and a relatively new cannabis giant. In 2020, Aphria entered a reverse acquisition arrangement with Tilray, resulting in one of the largest marijuana companies in the world, now collectively called Tilray. Like most other companies in this industry, Tilray has seen far better days.

The stock currently trading at $4.2 per share was over $24 per share less than two years ago. The benefit of this heavy “discount,” especially for such a well positioned company, is that when the market is optimistic, the recovery results in exceptional capital growth.

It has seen two growth phases of 60% and 66% in 2022 alone, with neither lasting more than a couple of months. Keeping an eye on the stock for another such growth phase will be an intelligent thing to do.

A former giant

Canopy Growth (TSX:WEED) was once one the largest marijuana companies in the world. It’s still among the leaders but has lost the top spot to newer players. Still, Canopy has a decent local and international presence. It has several brands under its name in the local market and four, each in the U.S. and international markets.

The company is leaning more toward the recreational marijuana direction. It only has one major medical marijuana brand to its name: Spectrum Therapeutics, which has a decent international presence. In the recreational market, however, Canopy’s spectrum of products is quite diverse, allowing it to target a massive potential consumer pool.

A small cannabis stock

With a market cap of just $370 million, Organigram (TSX:OGI) is the smallest of the three companies. It markets itself as a producer of high-quality cannabis for both medical and recreational purposes. The company currently has eight major brands under its banner.

What makes Organigram slightly different from some other companies is their focus on indoor growth and a three-level cultivation technology that allows the company to maximize the output and fully utilize the available geographic footprint.

This makes it a relatively efficient producer. Despite its smaller size, it has already established itself in a few local markets. The stock, if stirred with the right external elements, might experience decent growth in the near future.

Foolish takeaway

The Canadian marijuana industry is one of the few that has been suffering long before the coronavirus. And unlike the energy sector, this industry didn’t see a lot of upward momentum (apart from a few profitable quarters) and is back to being beaten to a pulp by a still-thriving black market while being entangled in red tape.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Organigram. The Motley Fool has a disclosure policy.

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