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Puff Up Your Portfolio: Top Cannabis Stock Picks for Savvy Investors
Puff Up Your Portfolio: Top Cannabis Stock Picks for Savvy Investors

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The saga of cannabis legalization in the United States unfolds at a glacial pace, with medical marijuana now permissible in approximately 37 states. Recently, Germany joined the fray, sanctioning personal cannabis use as of April – just in time for the laid-back observance of 4/20. Yet, it’s the federal green light for cannabis that would catapult the industry to new highs.

Several moons have passed since the U.S. Department of Health and Human Services urged relaxing cannabis restrictions, sparking a rally in cannabis stocks for the 4/20 fiesta. Alas, progress on the federal front has been plodding. Nevertheless, the looming November election may pave the way for expanded access as numerous states ponder legalization measures.

Amidst this hazy legal panorama, publicly traded cannabis stocks persist in their high-growth trajectory, characterized by modest market caps and elevated volatility. For those daring investors willing to dance on the market’s edge in the hopes of reaping rewards from anticipated legal shifts, the cannabis industry might offer a puff of promising opportunities as it unfolds.

Canopy Growth (CGC)

As the cannabis ecosystem gets ready to rock the unofficial 4/20 parade, one company emerges as a beacon for investors – Canopy Growth (NASDAQ:CGC).

Canopy symbolizes the rollercoaster ride typical of investing in cannabis stocks for 4/20 and beyond, with its stock price careening wildly in recent times. During this spell, the company toasted Germany’s legalization bid and pledged to swiftly wade into the burgeoning market.

With the green light from shareholders on a fresh class of exchangeable shares, Canopy isn’t merely expanding its footprint. It may soon captivate more investor interest by paving the way for Canopy USA to snag significant U.S. assets, courtesy of Constellation Brands (NYSE:STZ) bowing out.

Analysts have cautiously nudged their Q1 earnings forecasts for Canopy upward over the last 90 days, often a harbinger of a potential earnings beat. As the foremost cannabis company worldwide by market cap, Canopy Growth’s performance could portend the fortunes of other cannabis stocks for 4/20 and beyond.

IM Cannabis (IMCC)

IM Cannabis (NASDAQ:IMCC), a medical cannabis player with operations in Israel and Germany, inked a licensing pact to introduce Avant Brands’ flagship BLK MKTTM brand in Germany. This collaboration bestows IM Cannabis’ German arm, Adjupharm GmbH, exclusive rights to roll out the brand in Germany’s medical cannabis domain, seizing the spotlight among investors eyeing undervalued yet volatile cannabis stocks for 4/20 and beyond.

In the 2023 earnings report, the company surpassed gross profit estimates by 7.5%, clocking at $9.8 million but not dodging a net loss of $10.2 million. However, the German market witnessed a robust surge in revenue and profitability despite grappling with Israeli market headwinds. With management spotlighting potential mergers and cost-cutting measures as growth catalysts post-Israeli turmoil, the timing of legalization in Germany appears ripe to tap into the burgeoning demand for this one cannabis contender for 4/20 and beyond.

Innovative Industrial Properties (IIPR)

For investors scanning the horizon in search of cannabis ventures for 4/20 and beyond, one real estate investment trust (REIT) offers a unique prospect by focusing on land for cultivators – Innovative Industrial Properties (NYSE:IIPR). The firm flaunts a distinctive business model centered on investing in cannabis stocks for the future by gobbling up, owning, and managing specialized properties leased to state-licensed cannabis players. This distinctive structure has propelled the REIT as one of the select cannabis entities churning out profits.

The company’s stock has exhibited relative stability compared to its peers, swaying around 15% year-to-date (YTD). Trading at a forward P/E ratio of 16.4x, IIPR sweetens the pot with an attractive dividend yield of 7.8%. It rakes in consistent cash flows through a real estate portfolio spanning over 100 properties across 19 states and has amped up annual dividends post-IPO.

For investors aiming to dip toes into a seasoned player with a proven business model, Innovative Industrial Properties warrants a closer look as part of a diversified strategy in navigating the realm of cannabis stocks for 4/20 and beyond.

On the date of publication, Stavros Tousios held no positions (directly or indirectly) in the securities discussed. The views expressed are solely those of the author, per the InvestorPlace.com Publishing Guidelines.

Stavros Tousios, MBA, is the founder and chief analyst at Markets Untold. Armed with expertise in FX, macros, equity analysis, and investment advisory, Stavros serves investors strategic counsel and invaluable insights.

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