While it’s difficult to say with confidence who will win out in the elections later this year, investors of cannabis stocks may have something to look forward to. Basically, the attention should turn not to a possible red or blue wave but rather a green one.
Fundamentally, President Joe Biden has a popularity problem: his candidacy is simply not resonating with voters. However, for the first time in history, the leader of the free world used part of the State of the Union address to promote marijuana reform. Such overt messaging could have strong implications for the election and for cannabis stocks overall.
Basically, the people have spoken. According to a Reuters report earlier this year, public support for cannabis legalization has reached an all-time high. Though it’s a tricky narrative, neither party will want to alienate voters in what should be an extremely tight race.
With that, below are a few cannabis stocks to consider.
Scotts Miracle-Gro (SMG)
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Founded in 1868, Scotts Miracle-Gro (NYSE:SMG) isn’t exactly what you would call a pure-play candidate for cannabis stocks. However, the business itself – manufacturing marketing and selling products for lawn, garden care and indoor and hydroponic gardening – features clear implications for the botanical industry. What’s great here is that the company offers multi-tiered relevance, irrespective of what happens to the legalization initiative.
Last year, the company suffered some shaky performances. In particular, its second-quarter earnings print of $1.17 per share missed the consensus view of $1.45. However, the company beat estimates for earnings per share in Q1, Q3 and Q4. During these periods, the average positive earnings surprise came in at just over 6%.
Intriguingly, experts believe that by the end of the current fiscal year, Scotts will post EPS of $2.69. That would be a massive improvement over last year’s print of $1.21. Further, per-share profitability in 2025 could hit $3.68.
Analysts rate SMG a moderate buy with a high-side price target of $70.
Canopy Growth (CGC)
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I’m going to be straight up: Canopy Growth (NASDAQ:CGC) represents an extremely risky idea among cannabis stocks. Sure, the company has a pedigree, being one of the top names in the production, distribution and sale of cannabis and hemp-based products for recreational and medical purposes. Primarily, Canopy operates in Canada, along with the U.S. and Germany.
However, Wall Street isn’t giving CGC stock the time of day in terms of market expectations. Per TipRanks, Canopy suffers from a moderate sell consensus view. Even worse, among the five experts within the past three months, not a single one issued a buy rating. That said, in August last year, Roth MKM’s William Kirk issued a “buy” rating with a $22.18 price target, implying 620% upside potential.
To be sure, Canopy has suffered from poor financial performance. In the trailing 52 weeks, CGC stock suffered a calamitous decline of 85%. However, there have been four upward EPS revisions in the last 30 days. Analysts seem confident that by the end of 2025, Canopy could narrow its per-share loss of $1.08. That’s still a loss but a far cry from the per-share loss of $52.25.
Tilray (TLRY)
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Let’s end on a more positive note with Tilray (NASDAQ:TLRY). Headquartered in Leamington, Canada, Tilray engages in the research, cultivation, processing and distribution of medical cannabis products in its home market. As well, the company has expanded operations to the U.S., Europe, Australia, New Zealand and Latin America, among other regions. The company operates through four segments: Cannabis Business, Distribution Business, Beverage Alcohol Business and Wellness Business.
Since the start of the year, TLRY stock lost 22% of equity value. However, last week, shares ended in the black by over 2%. Financially, as with other cannabis stocks, Tilray has incurred some ugly earnings performances. However, in fiscal Q4 of last year, it posted a per-share loss of 7 cents against an expected loss of 6 cents. That’s a significant improvement from the prior three quarters.
Moreover, by the end of the current fiscal year, analysts anticipate sales to hit $795.77 million. Looking to 2025, they project revenue of $885.55 million. In contrast, the company posted sales of $627.12 million last year.
Finally, covering experts rate TLRY a moderate buy with a $2.62 average price target. The high-side estimate calls for $4.10.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the biedexmarkets.com.com Publishing Guidelines.
