Sure, 2018 is not over yet. But it is not too early to look at the most important year for the Canadian cannabis industry. And in 2018 was a controversial for the Canadian marijuana shares.
Three Canadian marijuana stocks, however, clearly set the bar this year. While most of their counterparts are expected to end in lower equity prices in 2018 than at the beginning of the year, these three stocks posted impressive returns.
What are the three best Canadian marijuana stocks of 2018? None other than Tilray (NASDAQ: TLRY) Cronos Group (NASDAQ: CRON) and Canopy Growth (NYSE: CGC) . That's why these stocks sizzled this year and are smart picks to buy now.
In China, 2018 was the year of the dog. For the Canadian cannabis industry, 2018 was the year of Tilray. The marijuana maker completed its IPO on the stock exchange Nasdaq in July. At the end of September, the stock had risen more than 850%. Tilray will not finish the year so much, but its shares have more than tripled this year.
The company had a good share of good news in 2018. Tilray became the first marijuana manufacturer to receive approval for sale of cannabis flowers and cannabis oil products in Germany, one of the major international markets for medical marijuana. CalPERS, the largest pension fund in the US, bought a stake in Tilray – the first purebred marijuana stock the fund had purchased.
Perhaps the biggest reason why Tilray's stock price soared this year was that there were none. There are not many stocks to buy. Tilray is very low with only around 10 million shares available to external investors. Because of this low free float, good news for the company created a significant upward pressure on the stock price. This was especially the case when short sellers covered their positions.
. 2 Cronos Group
The Cronos Group spent most of 2018 in negative territory. The stock started in August, earning more than 60% of profit this year before collapsing again, losing all of its gains and then a few. Then came the news that changed everything for Cronos.
In early December, reports emerged that the large tobacco manufacturer Altria (NYSE: MO) was negotiating with the Cronos group about a possible deal. Soon, the Cronos Group confirmed that it is indeed talking to Altria. Only a few days later, on December 8, 2018, a deal was announced. Altria selected 45% of Cronos for a whopping $ 1.8 billion.
It did not take long for Cronos Group executives to figure out how to capitalize on the massive influx of funds that would soon be on their way. CEO Mike Gorenstein promised to build the global business of Cronos Group and invest more in research and development. After a wild ride in 2018, the company appears to end the year in better shape than ever, with a share price up around 30%.
. 3 Canopy Growth
Canopy growth increased 140% in October since the beginning of the year, driven by the continued momentum of the company's own large business. In August, alcoholic beverage giant Constellation Brands (NYSE: STZ) announced that it invested $ 4 billion in Canopy Growth.
A general market pullback and a sell-off of marijuana stocks has taken a heavy toll on Canopy's stock price in recent months. However, Canopy Growth still rose more than 10% during the year, enough to create the third-strongest Canadian marijuana stock of 2018.
After having been friends with Tilray for a while, Canopy Growth once again claims this to be the largest market capitalization of Canadian marijuana holdings. The company appears to be embarking on a series of acquisitions that will increase with the completion of the Constellation in November. Canopy has already bought a Colorado-based hemp explorer and a German vaporizer manufacturer since Constellation received the big cash inflow.
Are you buying?
I would immediately mark one of these top stocks by 2018 the buy list. Tilray's IPO will end on January 15, 2019. Insiders can then sell some of their stock, probably at a tremendous profit. The good news is that Tilray's float will increase. The bad news is that the stock price is likely to be lower when insider sales are of significant importance.
However, I believe Cronos Group and Canopy Growth should be in good shape by 2019. Both companies are already or will do so soon with cash flush. Both have strong partners with expertise in building consumer brands.
Canada's recreational marijuana market should gain momentum, as do medicinal marijuana markets in countries around the world. Even the US could open Cronos and Canopy with the legalization of hemp (cannabis containing low levels of psychoactive THC).
It is possible that 2019 could hold as much volatility for these two Canadian marijuana stocks as 2018. However, in the long term, both the Cronos group and Canopy Growth should be patients' winners.