In case you have not noticed, marijuana stocks hold all the attention of Wall Street and investors. An expected four to six-fold increase in global cannabis sales over the next decade, combined with three- or four-digit percentage gains in popular pot stocks over the past two years, is generally a good way to keep investors intrigued.
However, there may be no group of investors more excited about the rise of cannabis than millennia.
Millennials really pot of love
In the Gallup poll conducted in October 2018 on marijuana, the national pollster revealed that 66% of Americans were in favor of the idea of large-scale legalization. But for the age group typically associated with the millennial generation, support was 78%. Millennials have long had a more favorable view of marijuana compared to their parents and grandparents, and have also favored options for consuming high-margin derivatives such as oils, food products, brewed beverages , vapes, concentrates and news items, with open arms.
Suffice it to say that Generation Y represents the future of the cannabis industry and that their buying habits will dictate to a great extent North American industry products. American weeds.
In addition to partially dictating the direction of the pot industry in North America, their investments can also indicate what marijuana stocks will stand out in the long run.
According to Robinhood data, an investment app of 6 million users whose average age is 32, four of the 14 largest holdings of its users are pot stocks. Courtesy of Robinhood's list of top 20 holdings Daily investors, these cannabis stocks are:
- Aurora Cannabis (NYSE: ACB): The # 1 stock most held on the application.
- Cronos Group (NASDAQ: CRON): Stock number 6 the most held.
- Cover growth (NYSE: CGC): Number 11 most held shares.
- hexo (NYSEMKT: HEXO): The # 14 most held shares.
Why Aurora, Cronos, Canopy and HEXO are Millennial Investors' Favorites
Why these four names? Well, for starters, they are really visible. These four marijuana stocks went from OTC to a major US stock exchange between the end of February and the end of December 2018. In doing so, they now trade many more shares daily than they do. were on the OTC stock market, and they received a lot more Wall Street coverage, which often keeps these businesses in the news.
These four pot stocks are also among the largest producers expected in Canada in terms of peak annual production. Aurora Cannabis expects to lead all Canadian producers with an annual production of at least 662,000 kilograms when it is fully operational, followed closely by Canopy growth exceeding 500,000 pounds per year. . A little further behind, HEXO aims to produce at least 150,000 kilos a year following the acquisition of Newstrike Brands, while the Cronos group is estimated at 117,500 kilos a year. Respectively, excluding the production of joint ventures and royalty companies, this company ranks Aurora, Canopy, HEXO and Cronos in first place among Canadian producers # 1, # 2, # 6 and # 9.
There are also many intangible factors at play. For example, Aurora Cannabis leads all marijuana stocks and is present in 24 countries (including Canada). Canopy Growth and the Cronos Group are the Group's two richest cash holdings, after the respective investments in Constellation Brands and Altria. And then there is HEXO, which has quietly established a mix of partnerships and joint ventures.
In short, these are exceptional marijuana stocks that dominate news feeds, making them easy choices for Generation Y investors on Robinhood.
Popular does not mean profitable
Again, it is important to keep in mind that popularity does not necessarily mean profitability. Of the 20 most widely held securities on Robinhood, many lose money or are consistently underperforming.
Get away from the cannabis landscape a bit, Fitbit, You're here, Break, and Take powerthe respective numbers 7, 9, 12 and 18 are on the list of the most held numbers. Yet all of these companies are expected to lose money in 2019. Other popular actions, such as General Electric, Ford, and Go Pro at n ° 2, 3 and 8, earn money, but have largely underperformed the market in general.
Now back to marijuana stocks. All four – Aurora, Cronos, Canopy and HEXO – are currently losing money and, with the exception of HEXO, could still do so in 2020. In fact, one could argue that millennia have taken a very bad decision to anoint Aurora and Cronos as two of their six most widely held shares.
Although Aurora Cannabis dominates production opportunities and international expansion, it is also at the top of the pack in terms of dilution-based stocks. Since August 2016, Aurora has completed 15 acquisitions, many of which were fully funded through the issuance of common shares, including the $ 2 billion takeover of MedReleaf. As a result, Aurora Cannabis has issued 1 billion common shares in less than five years and, since the beginning of 2018, despite an almost tripled market capitalization, the stock price of its stock has actually decreases.
The Cronos group, meanwhile, seems to be the most expensive pot stock book per pound, based on a handful of indicators. In addition to having recovered $ 1.8 billion from Altria, Cronos barely ranks among the top 10 producers and has a marginal presence in foreign markets in Canada.
With the exception of HEXO, and possibly Canopy Growth, I can not say that I am particularly encouraged by the investment choices of millennials in the cannabis industry.