Cannabis Stocks to Watch For and Possibly Invest in 2021

By all merits, 2020 has been a year like no other. A health crisis turned into an economic crisis has pushed a sheer majority of retailers into a ‘will or won’t’ situation.  With effective lockdown and movement restriction policies, retailers had to adapt to contactless, remote selling. Cannabis retailers were no exception. But, if there was one favorable critical factor, it was the recent U.S. elections. Since voters in Arizona, Montana, New Jersey, South Dakota, and Mississippi voted in favor of recreational and/or medical cannabis, marijuana stocks enjoyed an overall boost. For Aurora Cannabis, GrowGeneration, and Village Farm International, it meant doubling their shares, so effectively, November was a great month for this batch of three.

Aurora Cannabis

Aurora Cannabis was one of the big winners this fall. Its shares have rocketed nearly 186% in November, although it’s still losing market share in Canada’s recreational cannabis market. The company is part of a greater trend where Canadian cultivators of cannabis are opting for more down-to-earth production goals, an expected reaction after overspending and over expanding for the last few years. At the beginning of November, Aurora surpassed previous expectations for the fiscal 2021 Q1. According to sources, the Edmonton-based company generated net revenue of CA$67.8 million, which is almost CA$4 million more than the upper margin of the previously projected range. For Aurora, this is a significant gain. As recently as June, the company succumbed to aggressive measures following the failure of its newly invested plans. While there were a lot of new job openings across the cannabis industry, Aurora had to lay off employees during the summer. The company also moved to significantly reduce its annual production quotas from 500,000 kilograms (kg) of dried cannabis annually to roughly 140,000 kilograms. The move has saved Aurora millions, especially in administrative spending. As recently as May, Aurora completed its acquisition of Reliva, whose CBD products are available in over 20,000 retail stores and are almost equally popular as those of Charlotte’s Web. Completing the acquisition sealed an important first ‘expansion chapter’ of Aurora into the U.S. market.  The stock may currently look significantly undervalued. But now just might be the right time to take a position. When you look at companies like Aurora, which had a successful push into the U.S. market and whose efforts at home are to synchronize with realistic domestic trends, the future appears to be bright for Aurora in achieving its growth goals.  For the cannabis investors who trust that a bit of risk can go a long way, now or in early 2021 might be the right time to invest in Aurora cannabis’s stock, but if you want to play safe, it may be wise to wait just a couple of months more to see how things unfold.

Village Farms International

Another company that has seen big gains is Village Farms International. Their stock jumped almost 144% higher in November. Several developments played a role in such a jump.  Compared to Aurora, Village Farms International did better numbers in terms of revenue growth and profit. Investors liked the quarterly results the company achieved.  While the company’s shares soared after the U.S. election, probably the most important thing for them was completing the acquisition of Pure Sunfarms, a joint cannabis venture the company initially formed with Emerald Health Therapeutics.  “Our ownership of all of Pure Sunfarms is a major next step in building on Village Farms’ foundation as one of North America’s leading, vertically-integrated produce suppliers to become a diversified, plant-based consumer packaged goods business to expand into high-value, high-growth opportunities in legal cannabis and CBD,” said in a statement Village Farms CEO, Michael DeGiglio at the time. Village Farms’ new ownership already seems to pay off, with Pure Sunfarms accomplishing several significant milestones recently. The greenhouse BC grower has obtained a license to carry out sensory evaluation trials for cannabis from the government-run Health Canada. It has also expanded its merchandise overseas in Hong Kong with the launch of new CBD products, and it has signed a medical cannabis supply agreement with Shoppers Inc.  While Village Farms appears to be a safer cannabis stock to invest in 2021, the new year's early months will be determinative whether such a move is recommended or not.

GrowGeneration

Last but not least, GrowGeneration seems to be one of the safest cannabis stocks to invest in 2021 for now. In November, the hydroponic commercial grows supplier has seen a 110% increase in its share.  GrowGenerations has also benefited from the U.S. vote to expand legalization of weed. As the most prominent U.S. retail chain specializing in hydroponics and organic gardening, it appears to be in a perfect position.  Even before Election Day, GrowGeneration came forward with some excellent standings. The company had seen a major revenue boost of $55 in Q3, a 153% jump from the $21.8 million last year over the same time. Looking down the line, GrowGeneration has seen a steady growth of its online sales and a steady increase in its revenue.  Such a consistent growth coupled with the hydroponics’ supplier recent acquisitions such as that of Big Green Tomato, a company that owns Arizona’s Hydroponics Depot and has two hydroponic stores in Michigan, and a transaction with The GrowBiz, the nation’s third-largest chain of hydroponic garden centers based in California and Oregon, puts GrowGeneration on a steady track. So, it's easy to see why GrowGeneration is one of the likeliest cannabis stocks to attract investors' attention over the forthcoming period.

Looking ahead

Despite the pandemic, the cannabis industry has been booming. Even when the stock numbers are not at their greatest, the legalization of cannabis is continually advancing in various ways, and cannabis stocks to invest in 2021 may turn out very fortunate for those who have the zest. A giant wave is to be expected, enhancing the boom. The Biden administration is willing to govern a favorable-to-cannabis change, although this administration's results may be better felt and seen in the second half of its term when they can open more advantages.  In the meantime, the holiday period before and through Christmas may give more hints and more signs of whether it’s a good idea to invest in particular cannabis stocks or not. For what it’s worth, Thanksgiving ‘Green Wednesday’ has shown that Americans have a big appetite for cannabis when holiday mood prevails in the dining room.