Over the past couple of years, the hype behind cannabis stocks has been building to an all-time high, with many company stock prices doubling and tripling in the first nine months of 2018. Although the last quarter of the year shook the foundations of many of the less serious cannabis investors, 2019 has already seen an excellent return to force. Just in January, global cannabis stocks increased 31 percent, a trend that’s poised to continue throughout the rest of the year.
While the sheer mainstream excitement has died down somewhat for casual investors, serious researchers in the cannabis sector know that this year is poised for extreme growth for quite a few companies. While many are already in the tens of billions of dollars in market cap, some of the smaller firms out there could double, triple, quadruple, or more over the coming months and years. Here are a few of the most likely candidates for such an explosion in stock price.
Quite a few investment firms have called Origin House (CNSX: OH) a potential fortune maker over the coming years, with it being the top Californian distributor that provides over 70 percent of cannabis to the state along with holding 130 separate brands. It’s important to note that while much of the industry’s attention has been focused on Canada, the nation itself has a smaller population than California, a state that is considered the top cannabis market in the world.
Origin House’s attractiveness as an investment comes larger from its position at the head of the Californian cannabis sector. The state, which had a shaky start in 2018 thanks to high taxes and red tape, has been improving on this issue. Currently, BDS Analytics and ArcView Market Research estimate the Californian market will increase by over 150 percent conservatively – growing from $3 billion in 2017 to $7.7 billion by 2022.
Origin House, while focused on California, is headquartered in Canada in Canadian exchanges and has been expanding into the countries retail market. With a market cap of $375 million, Origin House comes at a middle ground between the smaller, riskier small-cap cannabis companies and the larger, more established businesses in the market already. Origin makes this list simply for being at the top of the world’s largest cannabis market, let alone for the other reasons it has going for it.
HEXO (TSE: HEXO) is a company that’s similar to Origin House in terms of market capitalization and position, however, targets a completely different market. While the former focuses on California, the later operates largely in Canada. Specifically, the company has secured a five-year contract with the provincial operator of Quebec’s cannabis stores and is also expected to be the leading players in some of the new cannabis niches coming about.
One of the areas HEXO is poised to dominate is the CBD-infused beverage space. Edibles and beverages are expected to be a $4.1 billion market in 2022; four times increase from the $1 billion spent in 2017. As a sub-market within the cannabis industry, it’s perhaps the most anticipated area within the marijuana market as Canada will legalize edibles in October. A survey from Deloitte should that six out of 10 cannabis users will be using edibles of a frequent basis once available.
HEXO currently has a partnership with Molson Coors to develop cannabis beverages, an agreement that has secured a steady revenue stream worth at least several hundred million dollars over the next few years. As such, it’s not hard to see why HEXO is one of the most favored smaller cannabis companies in the market to date.
While the other two companies mentioned so far in this list ended 2018 with modest returns, 37 percent and negative 7 percent respectively, FSD Pharma (CSNX: HUGE) holds the distinction of being one of the most successful companies in 2018 despite the downturn that was Q4. Second only to Tilray, FSD Pharma saw a 133 percent overall increase in stock price. While past performance isn’t indicative of future gains, the fact that the company’s market cap is still at $570 million means it has plenty of room still to grow.
FSD Pharma’s claim to fame in the industry is its innovative hydroponic production techniques in cannabis growth, something that few other companies can match. It also has a potential 3.8 million square foot facility in the works, potentially becoming the world’s largest when finished.
When compared to most other major growers, FSD Pharma is operating its facilities on a debt-free basis and has strong investor confidence going forward. Partially this is due to its smaller size when compared to other growers like Aurora and Canopy that are already in the billions, there’s plenty of room to grow. This is compounded by the fact that some major companies, such as Aurora, are aggressively expanding via all-stock acquisitions, diluting their share prices in the process. FSD shows no signs of this practice, helping strengthen already strong investor confidence in the company.
Many analysts have been holding up Organigram Holdings (CVE: OGI) as one of the top companies going forward. It’s not hard to see why when company executives expect its newest quarter results will produce more revenue than it’s entire fiscal 2018 year put together. Sales are estimated to grow by 891 percent in fiscal 2019, and further 87 percent on top of that in fiscal 2020.
Yet surprisingly, the company has had little attention from mainstream Wall Street analysts. The company happens to be one of the most efficient growers in the industry through its three-tiered growing system. It also has licenses to provide cannabis to almost every province in Canada and is also gearing up for the upcoming cannabis edibles legalization in October 2019 with its own line of products backed by Canada’s Smartest Kitchen brand. Few companies are expected to blow up more this year than Organigram.
Khiron Life Sciences
A choice the many people wouldn’t expect, there are reasons to suspect that Khiron Life Sciences (CVE: KHRN) could see massive growth this year. Instead of operating in conventional markets such as California or Canada, the company has a major lead in Latin and South America. With over 68 million patients spread out throughout the region, Khiron already has a major lead over its competitors in the medical cannabis space, acquiring crucial rights from government regulators to commercialize and market their products.
Back in January 25th, 2019, Khiron’s share prices surged 19 percent after it announced a joint venture with Dixie Brands to further introduce cannabis-infused products throughout Latin America. This means that the coming years could lead to an explosion in revenue for the company. It’s also the smallest companies listed in this article, with a market cap of $197.8 million.
A rising tide lifts all ships, and as the cannabis market looks forward to an extremely favorable 2019, most companies are going to see their stock prices increase one way or another. However, there are quite a few businesses still somewhat flying under the radar that are poised to experience dramatic, exponential increases over the year or two. Overall, Origin House, HEXO, FSD Pharma, Organigram, and Khiron are some of the surest bets going forward for massive growth.