The most popular cannabis stocks could see higher highs.
The U.S. Department of Health and Human Services wants to downgrade the drug from a Category 1 substance to Category 3.
House Democrats just filed a Marijuana Legalization and Expungements Bill, which, if it goes through, could be another sizable catalyst. It could also send these seven popular cannabis stocks below screaming higher.
Three, a majority of Americans believe cannabis should be legal. In fact, according to Pew Research, 88% of U.S. adults say cannabis should be legal. Only 10% say it should not be legal.
In addition, next week, the Senate Banking, Housing and Urban Affairs Committee is expected to hold a session for the SAFE Banking Act, which may have enough votes to pass according to NBC News.
All could be substantial catalysts for cannabis stocks, including these seven Reddit-loved popular cannabis stocks.
Tilray (TLRY)
Recent weakness in Tilray (NASDAQ:TLRY) may be an opportunity.
Since bottoming out around $1.50 in late June, the cannabis stock hit a high of $3.40 before pulling back to $2.38 on broad market weakness.
However, should we see positive developments with reform and rescheduling, TLRY could push to higher highs.
Helping, earnings have been impressive. In its most recent quarter, EPS came in at zero, which beat expectations by four cents. Revenue of $184.2 million was also up just over 20% year over year, and beat expectations for $30.2 million.
The company also expects to see EBITDA growth of 11% to 27% year over year, as well as positive free cash flow.
It just bought eight craft beer brands from Anheuser-Busch (NYSE:BUD), which makes Tilray the fifth-biggest craft brewer in the U.S. That should also help broaden the company’s U.S. presence, as it waits on cannabis reform. It’s also one of the popular cannabis stocks is ready to pop.
Cresco Labs (CRLBF)
Cresco Labs (OTCMKTS:CRLBF) just opened its 69th dispensary, which includes locations in eight states where sales could top $1 billion, as noted in the company’s investor deck.
Plus, it has a leading market share in Illinois, Massachusetts, and Pennsylvania.
Earnings haven’t been too shabby either. In its second quarter, the company booked revenue of $198 million. While that was down 9% year over year, it was up 2% sequentially.
It also generated a positive operating cash flow of $18 million. While it booked a loss of $43 million, it’s still an attractive investment- especially as it trades at less than sales.
Green Thumb Industries (GTBIF)
There’s also Green Thumb Industries (OTCMKTS:GTBIF), which just watched its stock pop from about $7 to a high of $12.50.
While it backed off with the broader market, it could also race higher on reform, rescheduling, strong earnings, and a recent $50 million stock buyback announcement.
The company is a large multi-state operator with 84 retail locations in the U.S. and, unlike many of its competitors, it’s growing.
In its second quarter, net sales were up 2% quarter over quarter to $252.4 million. It also saw net income of $13.4 million.
Plus, in the first six months of the year, GTBIF generated 93 million in cash flow from operations. Even better, at the close of the second quarter, it had a strong balance sheet with $149 million in cash on hand.
Canopy Growth (CGC)
Canopy Growth (NASDAQ:CGC) was left for dead at less than 40 cents. But it’s showing signs of life again.
All thanks to the potential for reform and rescheduling, which sent CGC to a high of $1.92. While it’s now back to 77 cents on broad market weakness, keep an eye on it.
Not only did the company just post net revenue of $109 million, it also believes it could achieve positive EBITDA across all four businesses, according to Chief Financial Officer Judy Hong.
She added CGC has remained focused on opportunities to strengthen its financial position “through further reducing cash burn, monetizing non-core assets, and reducing debt.” If it can continue to do so, it could help make CGC cash-flow positive.
Advisor Shares Pure US Cannabis ETF (MSOS)
ETFs such as the Advisor Shares Pure US Cannabis ETF (NYSEARCA:MSOS) were among the most-loved cannabis ideas on Reddit, too.
As I usually say, ETFs are a great investment. Not only do they allow you to diversify with dozens of stocks, but they’re also cheaper. You can buy MSOS ETF, for example, for around $8.
Since the start of September, the MSOS ETF popped from about $5 to a high of $9.88. While it’s also getting caught up in the broad market pullback, the ETF is another strong, long-term bet on a potential cannabis boom.
SNDL (SNDL)
Even cannabis and liquor retailer, SNDL (NASDAQ:SNDL) has been explosive.
In its most recent quarter, it posted revenue of $244.5 million Canadian dollars, up 9.3% year over year.
Its net loss was more than cut in half by 55%, and it’s now on course to see $1 billion Canadian dollars in revenue this year, from $61 million in 2020. Even better it saw an adjusted EBITDA of $2.2 million Canadian dollars.
The company has also been transformed by two key acquisitions. There was Alcanna in 2022, and The Valens Company just this year.
With Alcanna, SNDL has big access to Canada’s alcohol retail network. The Valens Company deal strengthened its cannabis product portfolio.
Aurora Cannabis (ACB)
Another hot, Reddit-loved cannabis stock to consider is Aurora Cannabis (NASDAQ:ACB). It’s also been explosive since September, running from about 45 cents to a high of $1.15.
Of course, this one is pulling back, too, but keep an eye on it. Should we see cannabis reform and rescheduling, cannabis stocks, like this one could push even higher. Earnings have been solid here, too.
In its first quarter, adjusted EBITDA was $2.2 million Canadian dollars, as compared to a loss of $8.8 million Canadian dollars year over year. Revenue was up nearly 50% to $75.11 million from $50.1 million year over year.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
