8 Cannabis Stocks With Wall Street Buzz

top cannabis stocks.” data-reactid=”12″>It’s been a disappointing year for cannabis investors. Canadian market growth hasn’t been as strong as many companies had anticipated, creating growing pains and cash crunches for top cannabis producers. Many of the most popular cannabis stocks that performed so well in early 2018 are down 20% or more. Cantor Fitzgerald just initiated coverage of the cannabis group, and the analyst team says there are plenty of opportunities for long-term investors to buy the cannabis dip. Here is Cantor Fitzgerald’s take on eight top cannabis stocks.

ACB)” data-reactid=”13″>Aurora Cannabis (ticker: ACB)

ACB stock.” data-reactid=”14″>Analyst Pablo Zuanic says there are more positive catalysts than negative ones for Canadian cannabis producers like Aurora Cannabis in coming months, but there is more potential upside elsewhere within the group. Zuanic says Aurora is the most profitable of the “big three” Canadian legal producers given its gross margins are better than 50%. However, Aurora’s balance sheet has made its near-term financial situation somewhat precarious. How much and how well the company raises funding will be important factors, Zuanic says. Cantor Fitzgerald has a “neutral” rating and price target of $5.10 Canadian dollars ($3.87) for ACB stock.

APHA)” data-reactid=”15″>Aphria (APHA)

cannabis company is focusing on developing European infrastructure that will help it expand overseas in fiscal 2020. Cantor Fitzgerald has an "overweight" rating and price target of CA$10.40 for APHA stock.” data-reactid=”16″>Aphria currently trades at a discount to its peers, but Zuanic says the company’s prospects for profitability and its Canadian medical business is second only to Aurora. In addition to its medical sales, which account for about 40% of its business, Zuanic says Aphria seems to be gaining recreational market share as well. Its business is primarily domestic today, but the cannabis company is focusing on developing European infrastructure that will help it expand overseas in fiscal 2020. Cantor Fitzgerald has an “overweight” rating and price target of CA$10.40 for APHA stock.

CGC)” data-reactid=”17″>Canopy Growth Corp. (CGC)

STZ), Zuanic says Canopy Growth is building a "global cannabis empire." Zuanic says Canopy is furthest along in the cannabis group in setting up its international business, including brand building and intellectual property. He estimates 60% of Canopy’s valuation comes from its international opportunity, more than any of its peers. However, Canopy has the lowest gross margins in the group, and its capacity is far beyond its current sales. Cantor Fitzgerald has a "neutral" rating and price target of CA$27 for CGC stock.” data-reactid=”18″>Fueled by a CA$5 billion investment by alcohol partner Constellation Brands (STZ), Zuanic says Canopy Growth is building a “global cannabis empire.” Zuanic says Canopy is furthest along in the cannabis group in setting up its international business, including brand building and intellectual property. He estimates 60% of Canopy’s valuation comes from its international opportunity, more than any of its peers. However, Canopy has the lowest gross margins in the group, and its capacity is far beyond its current sales. Cantor Fitzgerald has a “neutral” rating and price target of CA$27 for CGC stock.

HEXO)” data-reactid=”19″>Hexo Corp. (HEXO)

Zuanic says Hexo may be the weakest Canadian producer in its coverage. The company has ambitious goals of becoming one of the top two Canadian producers, but Zuanic says Hexo is lagging its peers in pricing while writing down inventories worth more than 25% of last quarter’s sales. Gross margins have dropped to the low 30% range, and the company’s net cash position of CA$130 million won’t last long given its cash burn was CA$480 million last quarter. Cantor Fitzgerald has an “underweight” rating and price target of CA$2.40 for HEXO stock.

OGI)” data-reactid=”21″>OrganiGram Holdings (OGI)

Unlike other top Canadian recreational cannabis leaders, OrganiGram is not pouring tons of cash into building an international empire. Zuanic says an efficient business model and low-cost indoor production have yielded positive earnings for the past four quarters. OrganiGram’s Canadian focus has allowed it to fly somewhat under the radar, but Zuanic says the company’s best-in-class 60% gross margins make the stock one of the safest bets in the group. OrganiGram is also working on biosynthesis of cannabinoids. Cantor Fitzgerald has an “overweight” rating and price target of CA$17.10 for OGI stock.

TLRY)” data-reactid=”23″>Tilray (TLRY)

cannabis stocks under Cantor Fitzgerald coverage, Tilray has had the worst 2019. Shares are down 68% year-to-date, and Zuanic says the stock still isn’t cheap. Zuanic says Tilray has the worst balance sheet in the group. The company doubled its net debt last quarter and Tilray will likely need to raise more capital in the future. Even after the steep sell-off, Zuanic says Tilray’s market cap is roughly in line with his sum-of-the parts valuation for the company. Cantor Fitzgerald has a "neutral" rating and price target of CA$20 for TLRY stock.” data-reactid=”24″>Of all the cannabis stocks under Cantor Fitzgerald coverage, Tilray has had the worst 2019. Shares are down 68% year-to-date, and Zuanic says the stock still isn’t cheap. Zuanic says Tilray has the worst balance sheet in the group. The company doubled its net debt last quarter and Tilray will likely need to raise more capital in the future. Even after the steep sell-off, Zuanic says Tilray’s market cap is roughly in line with his sum-of-the parts valuation for the company. Cantor Fitzgerald has a “neutral” rating and price target of CA$20 for TLRY stock.

cannabidiol, which was legalized in the U.S. in 2018. The company’s PlusCBD Oil brand is the second largest oil brand in a market that is expected to reach $4 billion in sales in 2019. Zuanic says CV Sciences is one of only a handful of CBD producers that have supply chains at a large enough scale to supply major mass retailers. Zuanic says sales growth will be "staggered and choppy" but should stay in the double digits. Cantor Fitzgerald has an "overweight" rating and $4.20 price target for CVSI stock.
” data-reactid=”26″>CV Sciences is Zuanic’s top pick in consumer cannabidiol, which was legalized in the U.S. in 2018. The company’s PlusCBD Oil brand is the second largest oil brand in a market that is expected to reach $4 billion in sales in 2019. Zuanic says CV Sciences is one of only a handful of CBD producers that have supply chains at a large enough scale to supply major mass retailers. Zuanic says sales growth will be “staggered and choppy” but should stay in the double digits. Cantor Fitzgerald has an “overweight” rating and $4.20 price target for CVSI stock.