The pot industry has been in the doldrums over the past months, resulting in steep declines in many pot stocks. Then, the onset of the coronavirus pandemic resulted in massive declines and further weakened cannabis stocks. The current bear market has proven to be one of the most damaging in history, and in only a matter of five weeks, the S&P 500 declined by 34%.
The rapid spread of the coronavirus led to lockdowns in many parts of the world, which has resulted in damage to the global economy. The virtual halt in economic activity can be weathered by mature industries, but the pot industry is still in its early stages, so this could prove to be quite damaging to it. Some marijuana stocks, however, seem more likely to recover after the crisis is over than others. Here is a closer look at 4 pot stocks that may be able to weather this storm:
These 4 Pot Stocks Could Recover Fast: Organigram Holdings (TSX:OGI) (NASDAQ:OGI)
Canada is now the hotbed of the cannabis industry, and one of the companies that seem best placed to recover is the Canadian firm Organigram Holdings. The company might not have as much cash as other companies in the industry, but it runs an extremely tight and efficient ship.
Organigram is one of the few companies to have a supply agreement with all Canadian provinces and is currently the only major cannabis producer in the eastern Atlantic region. It has the capability of producing 100,000 kilos a year, which puts it among the top producers in the industry. That gives it a major competitive advantage.
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The company owns only one production facility, which may not seem like a lot but has allowed it to generate the best yield in the industry. With only one facility to deal with, the company has more control over its output and can, therefore, adjust its production according to current demand, thereby helping to keep expenses under control.
These 4 Pot Stocks Could Recover Fast: Green Thumb Industries Inc. (CSE:GTII) (OTCQX:GTBIF)
Green Thumb Industries has emerged as one of the more promising multi-state operators in the industry and is one of the pot stocks that could be worth following.
The company has grown at a steady pace and has entered new states both organically and via acquisitions. Unlike other companies in the industry, Green Thumb has not stretched itself through debts, so its expenses have remained under control. The legalization of recreational marijuana in Illinois, coupled with the acquisition of Integral Associates in Nevada, have proven to be big boosts for the company.
While the coronavirus pandemic will hurt sales in Nevada, Green Thumb is expected to be a long-term winner, with analysts expecting it to top the charts in per capita spending on cannabis by 2024. The company has also signed sale-leaseback agreements in order to raise cash, which will likely help it through this rocky period.
These 4 Pot Stocks Could Recover Fast: MediPharm Labs (TSX:LABS) (OTCQX:MEDIF)
MediPharm Labs has emerged as one of the more promising companies in the cannabis space in recent times.
The extracts it produces are used to make derivative products like tropicals, beverages, and edibles. Due to the legalization of cannabis derivatives in Canada, MediPharm's prospects look even brighter at this point. The company’s clients have signed up for long-term contracts of around 18 months, something which helps ensure that MediPharm’s cash flow is steady, even during this crisis.
Predictability in cash flow is quite rare in the cannabis space, and the fact that MediPharm does have a relatively stable cash flow at the moment makes it one of the pot stocks that could handle the current situation.
These 4 Pot Stocks Could Recover Fast: Tilray Inc (NASDAQ:TLRY)
Tilray stock has tanked by 85% over the past year, but there is a silver lining here for investors who might be considering the stock at this point. The fact that pot retailers in Ontario and Quebec are going to continue to operate is a good sign for the company.
Tilray stock has also been struggling due to its poor financial performance. Earlier in March, the company released its results for the financial year 2019. Revenue rose to $167 million, but losses soared to $321 million.
However, due to lockdowns, people are spending more on marijuana right now, which could prove to be a major boost for pot stocks like Tilray. TLRY stock is also cheap at this point, with a price to sales ratio of only 3.
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