Since many pot stocks have experienced recent risks, it may be possible to invest at a discount. Investors with long-term plans have the opportunity to profit greatly from pot stocks as the regulatory landscape gradually improves.
A few pot businesses have grown in the last year despite the fact that several pot stocks have recently seen double-digit declines. Based on the following factorshighest year-to-date returns among pot stocks, inclusion in a significant exchange-traded fund, coverage by more than one Wall Street analyst, and a combined market value of at least $1.5 billionwe determined the top-performing cannabis stocks of 2024.
Why are pot stocks rising today?
The significant increase in pot stocks today coincided with reports from certain news sources that top US health officials are advocating for loosening laws. This development could clear the way for major national expansions of cannabis companies such as Tilray, Cronos, and Aurora.
Pot businesses have reportedly spent millions advocating for the legalization of it, but despite years of persistent effort, they have not yet seen the desired outcome. However, these latest events show that US authorities are reportedly adopting a more serious stance when it comes to progressively relaxing federal laws, which could significantly increase the global pot market.
Even if you are a cautious investor, you might not want to base all of your investment decisions on assumptions because pot stocks can significantly raise your risk profile due to their high volatility and sensitivity to both positive and negative news.
Top pot stocks of 2024
Here are the top pot stocks for 2024.
Trulieve Cannabis, the corporation.
Multistate operators, or MSOs, are big firms that operate in multiple states where pot is legal in the United States. They provide benefits to investors who are willing to purchase shares and hold them for an extended period. This is especially true for investors trying to get exposure to cannabis through pot stocks.
Bigger businesses are better able to weather a harsh regulatory environment than smaller ones. An MSO called Trulieve, which has locations in Pennsylvania, Arizona, and Florida, has a track record of using cash flow rather than capital raising to pay its tax obligations.
TerrAscend Corp.
This business operates in the states of Pennsylvania, Maryland, Michigan, New Jersey, and California through vertical collaboration. This implies that instead of purchasing it wholesale to mark it as needed and sell it in dispensaries, it sells products made from cannabis that it grows, prepares, and manufactures on-site. The business operates stores in Canada as well.
According to Paxhia, the business has been improving its financial position and has promising future growth. TerrAscend praised Pennsylvania's governor this month for supporting the state's adult-use pot program. Beginning early in the following year, the governor plans to legalize adult use for possession, consumption, and full sales.
Innovative Industrial Properties
This business leases state-licensed operator-specific real estate. It has sites in 19 states, totaling more than 100. The business recorded $309.5 million in sales in 2023, a 12% increase over 2022. The net income payable to common stockholders increased by 5% per share.
The company's debt at the end of the previous year was equal to 12% of its roughly $2.6 billion in gross assets. Its short-term investments, cash equivalents, and accessibility under the revolving credit facility totaled approximately $177.2 million.
Green Thumb Industries Inc.
Some pot businesses need to raise money in order to pay their taxes because their high tax bills are greater than the money they make from their business. However, some operator who is have managed to generate sufficient revenue through operating cash flow to meet their taxes, even in the absence of federal reform.
Green Thumb Industries, according to Paxhia, is "a great company" because of its investment in capital, revenue-to-debt ratio, capacity for debt repayment and stock buybacks, and competent management. According to Paxhia, "We were early shareholders in the company."
Scotts Miracle-Gro Co. (SMG)
The Scarlet Gardening Co. subsidiary of this horticultural and lawn care company supplies nutrients, lighting, and other materials for indoor hydroponic and growing environments. The industry slump has yet to spare the Hawthorne subsidiary; in February, the company announced that sales had decreased 39% on an annual basis to $80.1 million.
According to the company, this was partially caused by the ongoing downturn in the interior and horticultural markets. However, it also mentioned that restructuring measures, such as concentrating on fewer but more lucrative brands, played a role.
Scotts Miracle-Gro continues to be attempting to turn around the Hawthorne business due to declining sales by cutting back on its operational footprint, overhead costs, and range of products.
Verano Holdings Corp.
This vertically integrated MSO operates in 13 states, cultivates over 160 strains of pots a at 14 facilities totaling over 1 million square feet of growing space, and distributes its goods through over 130 company-owned dispensaries. Scores of other retail outlets carry its brands.
The company does not have to pay more to purchase it from third parties because the vertically connected system gives it greater power over how the goods it sells are produced and grown. Moreover, it improves operational efficiency.
SNDL Inc.
Expanding into pot sales is one way that a minimum of two pot businesses have survived the industry downturn. Among the others is SNDL, which generated revenue from its commercial business that was more than twice as high.
Along with a 3.1% increase in revenue, the company also revealed that it had doubled its net profit from operations compared to the same period last year. The pot retail sales segment alone saw a 14% year-over-year increase in quarterly revenues as SNDL concentrated on optimizing its operations.
Conclusion
Since the pot industry is nevertheless in its early stages and the winners, as well as the losers, remain to be chosen, purchasing stocks in the sector can be a wise decision. Those who put money into profitable pot businesses may see faster growth rates. Investors need to begin small and combine the portfolios they have with safer investments because there is a chance of suffering sizable losses. To determine whether pot stocks are a good fit for your investing objectives and risk tolerance, speak with a financial expert.
