Three stocks of cannabis to buy during the June rebound – The Fool Motley

There are more stocks of cannabis than you can possibly have that have had a dismal performance in the last two months. However, many of them started in 2019 with great progress. When you invest in cannabis stocks, you are exposed to large fluctuations.

However, some of these stocks are returning, and others may be in the process of doing so. Three stocks of cannabis that investors should consider acquiring during the June rebound are: CannTrust Holdings (NYSE: CTST), Cover growth (NYSE: CGC), and KushCo Holdings (NASDAQOTH: KSHB). Here's why these actions look like good choices.

1. CannTrust

By the end of March, CannTrust 's stock price had more than doubled since the beginning of the year. And then everything has collapsed. Shares collapsed after CannTrust posted disappointing fourth quarter results on March 28. But I think the long-term situation of CannTrust should be much better.

The Company's Phase 2 expansion at its Niagara facility is expected to reach full capacity in the third quarter. This will give CannTrust an annualized production rate of 50,000 kilograms of cannabis. CannTrust now has supply contracts with the 10 Canadian provinces. I hope that the company will be able to sell all the products that it can produce.

Bottlenecks in the supply chain have been a problem for CannTrust in the first few months after the launch of the adult recreation market in Canada. However, the company has taken the right steps to solve these problems. We should see an improvement on this front in the coming quarters.

CannTrust could really shine in the future in the cannabis derivatives market. The company is expanding its outdoor growth capabilities by focusing on this opportunity. CannTrust expects by the end of 2020 an annual production capacity of at least 200,000 kilograms. It should also have a very low cost per gram associated with its outdoor growing.

CannTrust's market capitalization is currently less than $ 800 million. I think the stock has a lot of room for maneuver over the next few years as CannTrust increases its production capacity.

2. Cover growth

You've probably heard the old saying that "the bigger they are, the stronger they fall". This may be true, but this has not been the case recently for Canopy Growth. Canopy is the largest cannabis producer by market capitalization and its stock has fallen over the past two months. But Canopy's decline was not as marked as that of its smaller peers.

I still love Canopy Growth, for several billion reasons. I am talking about of course the company's huge cash stocks resulting from the investment of $ 4 billion Constellation Brands (NYSE: STZ) made last year. While other Canadian cannabis producers must raise funds by issuing additional shares or convertible senior notes, Canopy has all the money needed to fund its operations and expansion efforts. .

Do not underestimate the importance of this money for Canopy Growth. Canopy has conquered the skin care and sleep solutions market with the acquisition of This Works, a UK based company. Canopy has entered the US CBD hemp market with its investment in the construction of a high-capacity hemp production facility in New York State. And Constellation's money helped Canopy pave the way for a possible jump in the US Marijuana market with its acquisition rights agreement. Surface Fund (NASDAQOTH: ACRGF) should US laws change in the future?

I think Canopy Growth will be a key player in all cannabis opportunities around the world. If you think that the global cannabis market will reach $ 100 billion in the next 10 years, as many industry observers do, Canopy Growth should be a good choice to buy on the rebound.

3. KushCo

In April, KushCo announced record sales for the second quarter. But the stock has declined, hampered by the general malaise of cannabis stocks. I like the long-term prospects of KushCo, though.

The first KushCo market is in California. While the state was starting at least badly in 2018 with the launch of its marijuana market for recreational purposes, the situation seems to be improving somewhat. KushCo should also benefit from the legalization of the recreational pot in Illinois and potentially in other major states later.

The legalization of hemp in the United States offers another great opportunity for KushCo. The fastest growing company in the last quarter was its energy and natural products business, which markets solvents and hydrocarbons used to extract oils and cannabinoids from cannabis plants. KushCo is expected to benefit from growing demand for CBD derived from hemp in the United States.

There is also a joker that could be huge for KushCo. The value of the company is much lower than that of Canadian cannabis companies with sales levels even lower. This is mainly because marijuana remains illegal at the federal level in the United States and KushCo shares are not yet publicly traded. But it is quite possible that federal laws will change in the next two or three years. If that happens, KushCo's actions will almost certainly skyrocket.