With global CBD sales potentially hitting $22 billion by 2022, here are four CBD stocks you'll want to know about. Find out which companies are dominating the industry and how to invest in them. Here are the top 10 CBD oil stocks to buy right now.
4 Stocks Giving Investors Direct Exposure to CBD
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Medical Marijuana, Inc.
With global CBD sales potentially hitting $22 billion by 2022, here are four CBD stocks you’ll want to know about.
Few if any industries have been as unstoppable of late as legal marijuana. Since the beginning of 2016, most pot stocks have seen their valuations rise by a triple-digit or quadruple-digit percentage, with global growth estimates for the industry soaring following the legalization of adult-use weed in Canada and multiple medical cannabis legalizations in countries around the globe.
How big could the marijuana industry become? That’s really a matter of interpretation, with a variety of Wall Street investment firms projecting anywhere from $50 billion to $75 billion in sales by the end of the next decade, and the duo of Arcview Market Research and BDS Analytics calling for a compound annual growth rate of nearly 27% between 2019 and 2022.
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CBD offers a compound annual growth rate of 147% through 2022
However, there’s an even hotter industry that’s budding from within the marijuana movement: cannabidiol (CBD). CBD is the nonpsychoactive cannabinoid best known for its perceived medical benefits, and since it won’t get a user high, it’s become an intriguing means of luring in new consumers who’ve never tried a cannabis-related product before.
According to a report from the Brightfield Group, worldwide CBD sales are expected to soar from $591 million in 2018 to as high as $22 billion by 2022, which works out to a compound annual growth rate of 147%, for those of you keeping score at home.
CBD itself can be extracted from two sources: the cannabis plant and the hemp plant. Generally speaking, hemp is a CBD-rich plant with minimal tetrahydrocannabinol (THC) content. THC is the cannabinoid that gets a user high. Meanwhile, CBD content in cannabis plants can be hit or miss, depending on the strain. CBD derived from hemp plants is legal in all 50 states following the December passage of the Farm Bill, whereas CBD derived from the cannabis plant is still considered illicit at the federal level. However, adding CBD of any form to food, beverages, or dietary supplements is a no-no since it still falls under the guidance of the U.S. Food and Drug Administration (FDA).
Four direct players in the CBD space
With this in mind, here are a handful of stocks that’ll provide investors with direct exposure to the burgeoning CBD market.
Image source: Getty Images.
Charlotte’s Web Holdings
Arguably no company is more attractive from a growth perspective relative to CBD than Charlotte’s Web Holdings (CWBHF -6.79% ) . Charlotte’s Web has the highest retail market share for CBD products in the United States, with access to 3,680 retail stores at the end of 2018.
This is a company that focuses entirely on hemp-extracted CBD, meaning that in one fell swoop, via a signature from Donald Trump on Dec. 20, 2018, all of its products became legal in 50 states, with some kinks to be worked out in the near future regarding CBD as a food and beverage additive. In other words, the Farm Bill’s passage rolled out the green carpet for Charlotte’s Web to get its products into new retail locations. Just about the only thing missing at this point is a brand-name retail partnership.
What isn’t missing are profits. Charlotte’s Web has been profitable on an operating basis for approximately two years, with the company generating $69.5 million in sales in 2018, representing 74% organic sales growth. For 2019 and 2020, Wall Street is looking for a successive more-than-doubling in aggregate sales to $152 million and $313 million, respectively. Again, with Charlotte’s Web already profitable, and CBD products typically yielding much higher margins than traditional dried cannabis flower, this company looks to be in excellent shape.
Image source: Getty Images.
Another CBD stock that finds itself on the right side of the profit column is CV Sciences (CVSI 6.67% ) .
Like Charlotte’s Web, CV Sciences retails a variety of hemp-derived CBD products in retail stores. According to its full-year results reported about a month ago, the company’s PlusCBD brand of hemp products was available in 2,238 stores at the end of the year, which represents a 45% increase from the end of 2017. However, the passage of the Farm Bill has already opened up new distribution avenues for the company, which means its retail door count should expand significantly in the quarters that lie ahead.
For the year, CV Sciences tallied $48.2 million in sales, up 133% from the prior-year period, while recording net income of $10 million. The lone estimate from Wall Street is forecasting 68% sales growth in 2019 and an additional 47% in 2020, with revenue hitting $119 million by the turn of the decade.
It is worth noting, though, that CV Sciences is facing possible legal pushback from a drug it’s developing that combines CBD and nicotine as a smokeless tobacco-cessation solution. Short-seller Citron Research, which often has short positions in the stocks it bashes (i.e., a financial interest), released a report in August 2018 showing that CV Sciences’ combo drug patent application had been rejected by the U.S. Patent and Trademark Office. Citron alleges this was never disclosed to investors, which has been grounds for lawsuits. It’s something to keep in mind if you’re considering CV Sciences as a possible investment.
Image source: Getty Images.
Medical Marijuana, Inc.
Even though it’s a tiny tot, another means of gaining direct CBD exposure is by considering penny stock Medical Marijuana, Inc. (MJNA 1.49% ) . Of course, don’t let the company’s $0.066 share price trick you — it has so many shares outstanding that it’s pretty much a bona-fide small-cap with a $238 million market cap.
As the name implies, Medical Marijuana, Inc. supplies hemp-derived products to the U.S., Mexico, and other international markets. This week, Medical Marijuana announced that it had secured about 100 new retail locations during the first quarter, outpacing internal expectations. Like Charlotte’s Web and CV Sciences, the passage of the Farm Bill looks to have played a big role, with CBD acceptance growing and nontraditional retailers willing to carry select CBD products.
Like its peers, Medical Marijuana has seen its top line moving in the right direction. Third-quarter revenue, reported back in November, was slightly over $16.8 million, representing a 116% year-over-year increase. Unfortunately, it hasn’t been profitable on a recurring basis, but it appears to be working toward that mark. In the third quarter, the company generated an operating profit, after expenses, of $0.6 million.
Keep in mind, though, that revaluations of the company’s investment portfolio can wreak havoc on Medical Marijuana, Inc.’s bottom line, and it has resulted in aggregate losses of $158 million through the first nine months of 2018.
Image source: Getty Images.
Lastly, investors can gain direct CBD exposure with the only marijuana stock to have gained FDA approval for a cannabis-derived drug: GW Pharmaceuticals (GWPH) .
In June, the FDA approved GW Pharmaceuticals’ lead CBD-based oral drug known as Epidiolex as a treatment for two rare forms of childhood-onset epilepsy. In multiple late-stage trials, Epidiolex wound up reducing seizure frequency from baseline by between 30% and 40%, which handily topped the effectiveness of the placebo over the defined treatment range. Epidiolex is currently the only drug approved by the FDA to treat Dravet syndrome, and its only potential competitor, Zogenix, had its new drug application for fintepla refused for the time being, giving GW Pharmaceuticals a clear runway to grow sales.
How big could Epidiolex become? That’s up for interpretation, but most Wall Street companies foresee $500 million to perhaps even north of $1 billion in peak annual sales. In the company’s most recent quarter, we learned that GW Pharmaceuticals sold $4.7 million worth of Epidiolex in its first two months on pharmacy shelves. While it’s had little trouble securing insurer coverage for its seizure therapy that costs roughly $32,500 a year, GW Pharmaceuticals is also going to need more than $4.7 million in quarterly sales to maintain a $5-plus billion valuation moving forward.
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Best CBD Stocks to Buy: Top Ten Picks
With the growing popularity of medical marijuana across North America, many investors consider investing in stock-exchange listed companies. Investing in CBD stocks is a good idea if you’re looking for an investment with high course potential. Many different companies produce CBD products, and they all have their strengths and weaknesses. As someone who has done extensive research on the best cbd stocks to invest in, I will list my top 10 favorite companies for 2022 listed on NYSE and Nasdaq.
Keep in mind, CDB stocks are currently not in investors focus, and many of them are at longer-term lows right now. It needs to become an attractive investment field with more media dominance again before investments become worthwhile again.
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We’ve added current analyst estimates and company fundamentals to each company in the list using the fundamental analysis platform Stock Rover. You can use the free 14-day Stock Rover trial to check the most recent statistics, peers and stock analysis.
What are CBD Oil Stocks
CBD oil stocks refer to companies that produce and distribute CBD products. Companies like these are usually best suited for long-term investments because they have high potential growth over the next decade or more.
What is CDB Oil
CBD oil is a type of natural herb that has been used for many different purposes, including medical and recreational. CBD oils are typically extracted from hemp plants, making them legal in the United States under federal law.
What Brokers to Use to Buy CDB Oil Stocks
The best brokers to buy CDB oil stocks with are either TD Ameritrade or E*TRADE. They’re both straightforward to use and have many great tools that will make investing easier for beginners.
The Best CDB Stocks to Buy
Table of Contents
1. Jazz Pharmaceuticals (JAZZ)
The Ireland-domiciled biopharma company Jazz Pharmaceuticals focuses on treatments for indications in neuroscience, sleeping disorders and hematology-oncology. Jazz Pharmaceuticals still has a negative EPS of -5.46 with a market cap of $10.5 billion. In December 2021, the stock hit a mid-term low at $117.64 and then started a rally to nearly $170 in April 2022.
2. Constellation Brands (STZ)
Cannabis investing ideas also lead to this company with a currently neutral to positive market sentiment. Constellation Brands currently has projected quarterly revenue of 83 million and estimated earnings per share of $1.55.
Constellation Brands is a global leader in beer, wine and spirits with a wide variety of popular brands like Corona Extra and Ballast Point.
Constellation Brands made an investment into Canopy Growth Corporation (WEED) for $191 million worth a few years ago due to the potential growth that cannabis holds. Constellation Brands acquired a 40% ownership stake in Canopy Growth and became the third-largest investor in the cannabis industry. The investments were the right decision, and the stock price went up significantly since.
After forming a mid-term low at $104.28 in March 2020, the price per share increased to a new all-time high in April 2022 at $261.52.
3. AbbVie (ABBV)
AbbVie is a company with a market cap of $200 billion and is a science-led global healthcare company formed in 2013 by the acquisition of Abbott. AbbVie’s product portfolio includes more than 125 products, including pharmaceutical and over-the-counter medications and CBD oil. The stock had a great run from the $60 level in 2000 and market a all-time high in April 2022 at $175.91.
4. Altria (MO)
Altria is a significant producer of tobacco products and has invested in cannabis companies in the past. They have made investments from over $200 million to an equity stake in Cronos Group Inc. a few years back, which is one of the largest Canadian cannabis producers. Not only do they own these stocks, but they also sell cigarettes as well, and the growth potential is enormous. The stock formed a mid-term low at $30.95 in March 2020, and is now trading at $55.23.
5. Corbus Pharmaceuticals Holdings, Inc. (CRBP)
Corbus Pharmaceuticals Holdings, Inc. is a clinical-stage pharmaceutical company focused on developing and commercializing novel therapeutics to treat rare, chronic inflammatory diseases that are often difficult to treat with existing therapies. CRBP is still Nasdaq listed but might get OTC listed when it remains trading below $1. Right now, the stock is trading at $0.35.
6. Tilray Inc (TLRY)
Tilray is a Canadian company that produces and sells cannabis products, both medical marijuana. They’re best known for being the first company to legally export cannabis from North America for medical purposes through Europe (Greece). The latest news is that they have entered the world of cannabis recreation. The company is focused on research and development, which has allowed them to offer new products like their High CBD Oil Drops for anxiety relief or insomnia issues. They’re also well-known in Canada because all medical marijuana patients are registered with Tilray’s online system called CanvasRx. Many day traders trade Tilray shares due to its high volatile price action during market hours. The price per share is at $5.3 right now.
7. HEXO Corp. Common Shares (HEXO)
HEXO Corp. is a Canadian cannabis company focused on distributing world-class products within the adult-use and medical markets. HEXO Corp. is one of the leading exporters in Canada’s burgeoning cannabis industry to countries around the world where marijuana is legalized for medicinal or recreational purposes. Like CRBP, the stock is trading below $1 for a while (at $0.41 right now) and might get delisted from Nasdaq.
8. Cronos Group Inc. (CRON)
Cronos Group Inc. is a company focused on medical marijuana and recreational cannabis for adult use. They’re best known for producing, selling, and marketing products in Canada, Germany, Israel, Italy and Australia. Cronos Group announced that they were partnering with Ginkgo Bioworks to engineer yeast that produces cannabinoids genetically. The good thing with Cronos is that they have a lot of room to grow based on solid company fundamentals. Right now, the stock is trading at $3.08.
9. Aurora Cannabis (ACB)
Aurora Cannabis is a Canadian company that is a producer and seller of medical cannabis products. They’re best known for being the first marijuana company to be listed on an American stock exchange. Recently Aurora Cannabis announced that they were entering the European market by acquiring a German company. The stock is currently trading at $3.1. They recently had a formal bid accepted and are set to acquire CanniMed Therapeutics, which has experts speculating that the company could be worth $600 million. Aurora is one of those stocks best to buy because it’s still undervalued due to its marijuana production being in Canada. Still, they have made their intentions known for expansion into Europe unfolding additional potential.
10. ETFMG Alternative Harvest ETF (MJ)
You have already read about the top favorite CBD stocks to buy. Investors can also participate in CBD oil stock growth by buying the exchange-traded fund. The ETFMG Alternative Harvest ETF is a fund that invests in companies operating in the global cannabis industry. The ETFMG Alternative Harvest ETF is an umbrella term as it includes a variety of sectors. The ETF is currently trading at an 5-year low at $8.45.
Introduction to Marijuana Stocks
Marijuana stocks are made up to become a thriving and profitable industry. With the legalization of cannabis in Canada and previously in the United States, stocks are bound to arise.
Cannabis companies are not only for those in North America but all over the world, from Europe to Africa. Cannabis stocks are an opportunity that investors can’t afford to miss out on now! One of the best next best things in speculative investing is CBD oil stocks and similar companies. With marijuana becoming more mainstream, there will be a rise of people looking to invest in this sector.
Marijuana Stocks With the Most Momentum
Momentum investing is when you invest in stocks that have gone up faster than the market. If a stock has risen more than the market, momentum investors think it will continue to do so because of factors that caused it to go up. Investors want to buy stocks with high returns and count on a trend continuation in the subsequent months for the stock. The concept is to analyze data of potential Marijuana stocks to buy via Nasdaq, NYSE or even OTC. While investments in ETFs are often compound profits over the years by contribution to the ETFs, specific investing in Marijuana momentum stocks aim for short-term growth with higher risk and higher potential. Keeping an eye on company financials, earnings, cannabis use, and news is important too.
The Role of the Farm Bill
The farm bill was passed to legalize the production and sale of hemp. This is a major step in the right direction for marijuana stocks and will help make it more mainstream and provide employment opportunities with its legalization. The best thing about investing in cannabis companies is that you can get an ownership stake through stock buybacks or dividends.
How to Gain Access to the Global Cannabis Stock Market
An online broker allows you to invest in marijuana stocks from around the world. It is a great way to diversify your portfolio, find new opportunities, and provide liquidity for international investments. By doing this, you can also invest in companies involved with CBD oil processing and production.
Conclusion About the Best CBD Stocks to Buy
Marijuana stocks are a great way to diversify your portfolio and find new opportunities. Investing in them provides liquidity for international investments and owning an ownership stake through stock buybacks or dividends.
Cbd stocks are a wise investment choice that is forecasted to grow exponentially in the future. The product development recently has resulted in a massive uptick in the interest of CBD stocks, and as such, it is crucial to stay up-to-date with this market.
The best CBD stocks have shown strong revenue growth over the past five years and are positioned for rapid future growth due to their product development. The earnings per share are solid for many companies in the marijuana industry, and more and more brands enter the profitable cannabis market.
It is essential to diversify your portfolio, so it is wise to invest in a range of stocks. Marijuana-focused companies with solid fundamentals, which will allow investors the best returns for their investment at a reasonable stock price, are a good starting point.
About the author: Alexander is the founder of daytradingz.com and has 20 years of experience in the financial markets. He aims to make trading and investing easy to understand for everybody, and has been quoted on Benzinga, Business Insider and GOBankingRates.