Marijuana/cannabis is easily one of the most beaten-down industries on the TSX. Its state wouldn’t have been as abysmal if the initial hype hadn’t set it rocketing upward in the early days. But those days are gone now, and many marijuana companies barely manage to stay in the green (financially), let alone grow.
There are glimmers of hope here and there, but nothing concrete that investors could rely upon to ensure that marijuana stocks will fully recover. Ironically, this uncertainty and partial hopelessness offer risk-tolerant investors a great opportunity. The odds against marijuana stocks are such that investors who bet on them might see exceptional returns if they make a decent recovery (not even a full recovery).
If that seems like an investment you might consider getting into, two weed stocks should be on your radar.
A U.S.-based cannabis company
Even though it came about as a merger of a Canadian and a U.S.-based company, Tilray (TSX:TLRY) is currently a U.S.-based company. Its primary focus is pharmaceutical/therapeutic research and products made with marijuana, but the company also has a recreational line of products.
However, the strongest point in the company’s favour is its global presence. It has multiple facilities in Canada and the U.S. (covering both markets) and is exporting its products to several countries around the globe. Penetrating the demanding European market alone is a considerable feat and may lead to fantastic growth opportunities in the future.
Tilray stock is relatively new, thanks to the merger, but it has already been doomed to the same fate as other stocks in the industry. It’s trading at an 85% discount from its 2021 peak. The good news is that if the stock manages to reach its former peak again in the future, you may grow your capital in the company by six- to seven-fold.
A Canada-based cannabis company
Canopy Growth (TSX:WEED) is one of the earliest giants of the marijuana industry, though it has been cut into a fraction of its former glory. The stock is currently trading at just $2.38 per share and has a market capitalization of $1.1 billion.
It used to trade at $67 per share at a time. If there is a remote possibility that the stock will reach that number again, it will lead to a 28 times growth of your capital if you buy it at the current price.
The company may have lost much of its market value, but some of its fundamental strengths remain. It has a decent U.S. presence that the company can leverage once marijuana is federally declared legal. It’s a well-known name in both medical marijuana and the recreational market and has grown its product portfolio to a decent size.
Foolish takeaway
In their current state, these do not even qualify as cyclical stocks. They show some positive activity when the market as a whole goes bullish, but triggering a solid recovery or at least a decently long period of growth might require something radical. U.S. marijuana legalization is a highly anticipated growth trigger for Canadian pot stocks right now.
