As the political landscape heats up with uncertainties swirling around the corner, investors eyeing cannabis stocks may find a glimmer of hope amidst the chaos. Forget the classic red versus blue narrative; it’s time to shift focus to the color of prosperity – green.
In an unprecedented move, President Joe Biden nudged history during the State of the Union address by advocating for marijuana reform. Such a bold stance could herald a significant shift in the upcoming elections and impact the cannabis stocks realm at large.
A Reuters report earlier this year revealed that public support for cannabis legalization has surged to record levels. In the midst of a nail-biting election, neither political party can afford to overlook the fervent pro-cannabis sentiments echoed by the masses.
Amidst this backdrop, there are three cannabis stocks worth a closer look.
Scotts Miracle-Gro (SMG): Rooted Strength
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Established in 1868, Scotts Miracle-Gro (NYSE:SMG) stands out as a not-so-typical contender in the cannabis stocks domain. While primarily focused on products for lawn and garden care, its involvement in indoor and hydroponic gardening unveils underlying ties to the cannabis sector. The strength lies in its diversified relevance, offering a robust advantage regardless of the legalization outcome.
In the past year, the company weathered some stormy performances. Despite a Q2 earnings miss, Scotts bounced back with beats in Q1, Q3, and Q4, boasting an average earnings surprise of over 6% during these periods.
Analysts project a substantial EPS leap to $2.69 by the end of the current fiscal year, a marked improvement over the previous year. Looking ahead to 2025, per-share profitability could surge to $3.68.
Market experts rate SMG as a moderate buy, with a high-side price target targeting $70.
Canopy Growth (CGC): Highs and Lows in the Canopy
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Let’s address the elephant in the room – Canopy Growth (NASDAQ:CGC) is a risky venture in the space of cannabis stocks. Despite its prestigious position in producing and distributing cannabis and hemp-based products, mainly in Canada, the U.S., and Germany, Wall Street remains lukewarm on CGC stock.
TipRanks data indicate a moderate sell consensus on Canopy. A recent lack of buy ratings from analysts underscores the skepticism. However, a glimmer of hope arises from an August 2021 “buy” rating issued by Roth MKM’s William Kirk, forecasting a whopping 620% upside with a price target of $22.18.
Although Canopy faced financial turbulence with an 85% decline in stock value over the past year, recent upward EPS revisions hint at a potential turnaround. Analysts foresee a narrowing per-share loss by the end of 2025, moving significantly away from the daunting loss figures.
Tilray (TLRY): Blooming Potential
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Ending on a brighter note with Tilray (NASDAQ:TLRY), headquartered in Leamington, Canada, the company delves into cannabis research, cultivation, processing, and distribution of medical cannabis products. With a footprint in multiple regions like the U.S., Europe, Australia, New Zealand, and Latin America, Tilray operates across varied sectors.
Although TLRY stock faced a 22% dip at the onset of the year, a recent upward trend signals potential growth. Financially, Tilray displayed notable improvement in the fiscal Q4 compared to preceding quarters, spotlighted by a more favorable earnings report.
Market analysts foresee a revenue surge to $795.77 million by the end of the current fiscal year, propelling further to $885.55 million by 2025, a substantial leap from the previous year’s figures.
Experts recommend TLRY as a moderate buy, with an average price target of $2.62. The high-end estimate forecasts a rise to $4.10.
