The cannabis industry has been in trouble for around a year now, and many of the stocks have seen record declines during this period. Many pot stocks suffered from issues of oversupply, slow rollout of stores in Canada, and also the continued threat of the illegal marijuana market. Because of all this, many stocks recorded declines, with plenty of pot stocks not out of the woods just yet.
However, if investors are looking to invest in cannabis stocks in 2020, there are still some promising companies that are to be found. Here is a closer look at three pot stocks that could be tracked closely by investors this year.
Pot Stocks to Watch Closely in 2020: Aphria Inc (TSX:APHA) (NYSE:APHA)
One pot stock that could be tracked closely by investors at this point in time is Aphria. APHA has emerged as one of the more promising cannabis companies in recent times, but now the stock is trading at its lowest level since it was first listed.
Aphria stock has declined by 80% over the past 12 months, and although it has suffered like many other companies in the industry, its actual financial performance has been better than most. The cannabis producer has managed to generate a profit in two out of the past three quarters, and that is something that makes it stand out from the rest.
While it is true that the profitable quarters came about through non-operating items, it should still be noted that profitability remains a huge achievement in the industry. That being said, the company might struggle to generate profits going forward due to the effects of the coronavirus on cannabis sales. The company is in a good position to ride out the crisis and has C$500 million in cash under its control. If the company can manage to generate profits once the pandemic is over, its stock could start flying.
Pot Stocks to Watch Closely in 2020: GW Pharmaceuticals (NASDAQ:GWPH)
Another promising cannabis stock at this point is GW Pharmaceuticals, which has declined by 50% over the past year and is now available at dirt-cheap valuations. While GW Pharmaceuticals has not been able to post a profit yet, the company has generated significant growth in recent times.
The company’s cannabis-based medicine Epidiolex has proven to be a massive earner, and in its full-year earnings, the company revealed that the sales from the medicine generated as much as $296.4 million. This made up 95% of GW’s revenue, which came in at $311.3 million. Last September, the company also got approval from the European Union to treat two forms of epilepsy, providing more use-cases for Epidiolex.
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One thing that investors should keep in mind is that Epidiolex is a medicine, meaning consumers are still going to purchase it despite the fears posed by the coronavirus pandemic.
Investors should also keep in mind that GW is financially strong; as of December 31, 2019, it has cash and cash equivalents worth $737 million in its books. The pot stock still has a lot of time to swing into profitability, and the most important thing to point out in this regard is the fact that GW has managed to create a product that could emerge as a leader in the epilepsy medicine space in the future.
Since GW possesses the skills to scale up Epidiolex manufacturing significantly, GWPH could prove to be a clever stock for investors this year.
Pot Stocks to Watch Closely in 2020: Tilray Inc (NASDAQ:TLRY)
Another cannabis stock that has been in the doldrums over the past year or so is that of Tilray. The company has been affected by many of the issues that plagued the cannabis industry, and in the past 18 months, TLRY stock has tanked by 98%.
In 2020, Tilray stock has already nosedived by 80%. In the fourth quarter of 2019, the company’s losses soared to a whopping $219 million, up from $31 million in Q4 2018.
One of the only bright spots for the company amidst the doom and gloom has been the performance of its hemp business. The acquisition of Manitoba Harvest in 2019 seems to have paid off handsomely, and adult-use marijuana and hemp accounted for 36% of Tilray's sales.
The company’s medical cannabis is currently available in 15 nations, and Tilray has also joined the cannabis 2.0 market with its own range of products. Despite these factors, it should be noted that its cash position is low, and until it becomes profitable, the stock might continue to be volatile. However, it is a stock that could be worth watching this year.
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Featured image: DepositPhotos © nazarenko
