Pot Stocks Are Back in the Spotlight. Here’s How to Tell Them Apart.

While marijuana stocks have often traded in tandem when driven by sentiment, many of these stocks have seen varying degrees of success. Some investors look to exchange-traded funds to bet on a broader basket of pot stocks. The ETFMG Alternative Harvest ETF (MJ), which has exposure to marijuana businesses, was down 24% on Thursday, back near levels from at the start of the week. But that ETF doesn’t include U.S. multi-state operators, or MSOs, which must list over the counter in the U.S. because they sell a product where it’s federally illegal. The Advisorshares Pure Cannabis ETF (YOLO) does include U.S. MSOs.

Here are some of the biggest individual stocks, and what analysts are forecasting. It’s not an exhaustive list, as there are more than a hundred public stocks with some ties to the cannabis business.

Tilray (TLRY) and Aphria (APHA)

Tilray and Aphria announced a merger in December. Aphria CEO Irwin Simon anticipates the deal to close in the first half of this year. An investor would receive about 0.84 shares of the combined Tilray for every share of Aphria that they owned. Aphria has a recent market capitalization of $8.3 billion, compared to Tilray at $10.1 billion.

Tilray entered the year with a high short interest at about 48% of shares available for trading, according to data from S3 Partners. That’s pared down to a recent 23%. Aphria’s short interest is about 7.4% of shares available for trading, down from 16% at the start of the year. When investors sell a stock short, they sell a borrowed share with the hopes that they’ll be able to return it by buying the stock at a lower price. When a mass of short sellers rush to cover and prevent further losses, it can drive stocks higher.

For Aphria, analysts expect the company to end fiscal 2021 in May with full-year sales of $534.8 million. They expect sales to grow to $710.3 million in fiscal 2022. On the other hand, Tilray ended its latest fiscal year in December. Analysts expect the company to report full-year sales of $208 million, growing to $277.8 million in the current year. Of course, the merger will cloud any far-reaching estimates.

The mean analyst rating on Tilray is a Hold, according to FactSet, though the mean price target is only $12.20. The average rating on Aphria is Overweight, but the mean price target is $12.60.

Sundial Growers (SNDL)

Sundial, which once traded above $11, has fallen to penny stock status. In February of last year, the core management team resigned. The company had problems that included a half-ton of cannabis rejected by a customer due to poor quality, MarketWatch reported. Earlier this month, Sundial announced a capital raise that sent shares lower.

The stock bounced back this month amid retail trader interest, it’s up 403% year-to-date. Its market value is at $4.3 billion after Thursday’s pullback. Analysts expect sales to hit $53.1 million for full-year 2020. Consensus estimates call for $62.6 million in 2021.

Aurora Cannabis (ACB)

Aurora Cannabis was previously one of the most-owned stocks on Robinhood. But the company for several quarters has struggled to hit positive adjusted earnings before interest, taxes, depreciation, and amortization. A new chief executive and some major cost cuts have helped, but it hasn’t won over analysts. None of the 17 analysts listed by FactSet have a Buy rating, while four analysts recently rated it a sell. The mean target price of $9.07 is below recent levels.

The company has a $3.7 billion market capitalization. Analysts don’t forecast a profitable fiscal year in the next few years. The consensus estimate calls for a $1.16 per share net loss for the fiscal year that ends in June, according to FactSet. In terms of sales, analysts forecast the company to hit $227.4 million in fiscal 2021, which ends in June. They forecast sales to rise to $303.3 million in fiscal 2022.

Canopy Growth (CGC)

Canopy Growth has a recent market capitalization of $19.7 billion. Brewer Constellation Brands (STZ) has a controlling stake in Canopy. The grower also has a deal with Acreage Holdings that would allow it to enter the U.S. cannabis market, but the merger itself is triggered by regulatory changes that would allow it to do so.

The company has a market value of about $19.7 billion. Analysts expect sales of $441.4 million for the 2021 fiscal year, which ends this March. They forecast that growing to $639.9 million in fiscal 2022.

Cronos Group (CRON)

Cronos Group was one of the few profitable Canadian cannabis companies in 2019, and investors expect that to continue in 2020, with estimates calling for earnings of 3 cents a share. But consensus estimates expect a net loss of 24 cents a share in fiscal 2021.

The company received $1.8 billion from tobacco giant Altria Group (MO) in 2018 for a 45% stake. Unlike competitors, the company has been conservative with its war chest. It still had $1.3 billion in cash and short-term investments at the end of September. On the flip side, analysts forecast sales only hit $43.8 million in 2020, and expect that to grow to $86.9 million in 2021.

U.S. multi-state operators

Though the recent rush toward pot stocks was spurred by a shift in political winds in the U.S growers that sell marijuana there have actually lagged their Canadian peers in recent months. Cantor Fitzgerald analyst Pablo Zuanic told Barron’s he believes “the top U.S. MSOs are attractively valued taking a long term view, even though they will get some of the Canadian downdraft.”

Big U.S. names include Curaleaf Holdings (CURLF), Green Thumb Industries (GTBIF), Cresco Labs (CRLBF), and Trulieve Cannabis (TCNNF). Zuanic has an Overweight rating on those stocks, while he has Neutral ratings on most of the big Canadian names. He projects U.S. cannabis market sales of $22.1 billion in 2021, $28 billion in 2022, and $49 billion by 2025.

Write to Connor Smith at [email protected]