You'd be hard-pressed to find someone who doesn't believe that January is undoubtedly the worst month of the year. It's cold, wet, and dark, everyone's always sick, and Christmas is a whole 12 months away. However, as an investor, it's not all doom and gloom, and January can often provide the best opportunity for gains in the stock market as most companies look to turn over a new leaf start off the new year on the front foot.
While the struggles of the Canadian cannabis market dominated headlines in 2019, 2020 brings with it a broader sense of optimism as companies and regulators alike look to learn from the mistakes of the first 16 months of legal cannabis. Added to that, January will see the launch of most pot firms' 2.0 products, opening the market for the arrival of edibles, beverages, vapes, and plenty of other cannabis derivatives. Here, we'll look at three pot stocks that could be set to make January the best month of the year.
Aphria Inc (TSX:APHA) (NYSE:APHA)
It's getting harder and harder to find a way to leave Aphria off any pot stocks to watch list. It's one of the more fiscally responsible firms on the market, choosing not to charge in with huge capital expenditure in an effort to snap up as large a chunk of the market as quickly as possible, which has been to the detriment of many of its compatriots. Instead, Aphria took a much more measured approach, waiting to see how the market shaped up in the early days of legalization before making any major moves.
As a result, Aphria is one of the Canadian cannabis firms to actually post a profit in 2019 and even surprised investors by managing to achieve the feat in two successive quarters. The company has also invested heavily in the German medical market through its distribution subsidiary CC Pharma. With that European asset set to account for at least half of Aphria's total revenue in next week's Q1 earnings call, investors will be on the edge of their seats to see if the company can make it a hattrick of profitable quarters.
Cresco Labs (CSE:CL) (OTCQX:CRLBF)
Acquisitions, mergers, and takeovers featured heavily in the cannabis space last year and look set to continue to take up headline space in the new year. Arguably the most eye-catching deal was between pot stocks Origin House (CSE:OH) (OTCQX:ORHOF) and Cresco Labs. First announced back in April, this $1 billion USD merger is set to create one of the largest cannabis firms in the world and has major upsides for investors in both firms.
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While this deal looks like it may have dragged on so long that some began to question whether the April 1 announcement was merely an April Fools joke, New Years Eve saw Origin's shareholders vote overwhelmingly in favor of the merger, which was subsequently court approved on January 6 meaning the deal should close in the next few days. With Cresco having just completed its first sales on December 31, adding Origin's California distribution operations and growing lineup of cannabis brands will make for one formidable player in the cannabis market.
Canopy Growth Corporation (TSX:WEED) (NYSE:CGC)
The world's biggest cannabis company looks set to spend much of January in the media spotlight after appointing David Klein as its new permanent CEO, taking over from interim CEO Mark Zekulin, who replaced the company's charismatic founder and face of the legal cannabis movement, Bruce Linton. Klein assumes the role having previously served as CFO of Canopy's largest shareholder, Constellation Brands (NYSE:STZ), and is likely to spend a lot of time talking to the press when he takes charge on January 14.
On January 7, Canopy also announced that it was opening five new stores in Ontario in a move to address the retail visibility issue that has so badly hindered the growth of pot stocks. This brings the company's national footprint to 37 stores, with more openings expected throughout the year. Although the company is not expected to release its financial results until February, it's very likely that the launch of its extensive 2.0 portfolio coupled with the arrival of Klein should drive some sizeable movement in CGC stock in the coming weeks.
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