With InvestorPlace naming Charlotte's Web stock as the best cannabis play for 2019, shares of the hemp producer Charlotte's Web Holdings (TSX:CWEB) (OTCQX:CWBHF) are jumping.
Currently, CWBHF stock sells for $15.86 on the OTC, up 5.76%. But, in fact, over the course of last week, the company packed on 16% in stock gains.
What did InvestorPlace say?
Charlotte's Web Stock Named Best Cannabis Play
Analyst Matt McCall, as part of InvestorPlace's Best Stocks for 2019 contest, picked Charlotte's Web Holdings as the best cannabis play for 2019.
Key drivers for his pick include:
- The company's focus on the niche CBD sector
- The early-stage advantage afforded to Charlotte
- Its impressive growth trajectory
- And the fact that Charlotte's Web stock remains largely undervalued in comparison to its peers
Let's look closer at these points.
CBD Sector
Charlotte's Web Holdings has a strong foothold in the growing and incredibly lucrative CBD market in the US. The hemp producer extracts CBD (or cannabidiol) from its acres of hemp and produces one of the top-selling CBD oils on the market.
This year Charlotte’s Web will plant 862 acres of hemp in total. This is an increase of 187% from last year's acreage, highlighting that demand is growing fast.
And according to the Brightfield Group, that growth looks like this: The hemp-derived CBD market is expected to increase from $591 million in 2018 to $22 billion by 2022. That is approximately 40x growth in only four years.
Already being a leading force within this market places Charlotte's Web is in a primary position to benefit.
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Early Leader
This leads us to the company's early leader advantage in this space. Founded in 2013, Charlotte's Web Holdings was one of the few hemp producers legally allowed under state law to produce hemp-derived CBD.
It has since grown to distribute CBD wellness products of all sorts, including tinctures, topicals, capsules, and edibles. In terms of market share, it has become the world's leading CBD brand, and much of this is in thanks to it having already forged a path long before industrial hemp was legalized at the US federal level last year.
Growth Trajectory for Charlotte's Web Stock
Only in March, the company's products were on sale in 3,680 retail locations. Today, that number has grown 6,000.
Further, the company brought in a new CEO named Adrienne Elsner. Elsner is a former senior executive of the US snacks division of global behemoth Kelloggs. Her assignment suggests the company is focusing on an even bigger picture, as McCall says:
"The selection of Elsner means that Charlotte’s Web will be focused on branding and shelf space in the coming years. Both are very important for the whole industry, and especially for the leading US CBD company."
There is an impressive trajectory regarding revenue, too:
"Revenue for 2018 came in at $69.5 million, and analysts believe the next three years will bring in revenue of $164 million, $352 million, and $469 million."
In recent weeks, Charlotte's Web stock corrected some of its impressive gains made this year. But for savvy investors, current prices like this might reflect a huge buy-in opportunity.
Especially if you agree with McCall and his best cannabis stocks of 2019.
What are your thoughts? Do you agree? Is Charlotte's Web stock for you?
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