Are These Two Cannabis Companies To Keep an Eye on?

With the ongoing COVID-19 pandemic and financial uncertainty, it can be hard to know which cannabis companies will sink or swim. Here are two that might go the distance.

In recent years, many countries have legalized the cultivation and sale of cannabis. Hence, there is a sudden increase in the demand for marijuana among adults. The products containing cannabis and its derivatives are also increasingly popular. Therefore, the industries involved in the development, distribution, research, and sales have experienced a sudden boom.

A research conducted by Marijuana Business Factbook shows some exciting estimates. It reports the sales of cannabis will grow by 40 percent in 2020 over the previous year. The estimated revenue that the industry will generate this year will be around $15 billion.

According to the latest estimates, many U.S. legalized states will join the trend of cannabis in the coming years. Hence, the U.S. alone will generate approximately $37 billion by 2026 in the marijuana sector. It clearly shows the potential for investors in this industry. However, it doesn't mean that all companies in this industry are generating profits. The investors have to choose the stocks carefully before making an investment to generate great profits.

In this article, we will cover two great stocks for cannabis investors. These stocks can help investors generate good revenue over the long term and interested individuals investing in the cannabis industry must keep the long term angle in mind.

Aphria (TSX:APHA)

When it comes to great marijuana stocks, you cannot ignore Aphria. It is one of the leading pot producers in Canada. In the last two quarters, this company has outgrown its competitors. Currently, it boasts the highest operating net income and quarterly net revenue in the industry. In fact, during the previous, its net income improved by $35 million in just nine months of 2020 due to its high supplies in many locations.

The liquidity of the company is also good, with a market capitalization of $1.5 billion. In the third quarter of 2020, Aphria has sold more than 14,000 kg of cannabis. This is twice the amount sold by the company in the second quarter. In the latest interview with Canada's Financial Post, CEO Irwin Simon revealed that the company is not facing a slowdown due to Covid-19. Even all the facilities of the companies are fully operational. Hence, it gives assurance that the company is likely to perform well in the future as well.

The net income of Aphria in the past nine months was CA$17 million, which is a huge improvement compared to the previous year when the company was at a  loss of CA$32 million during the same period. The gross profit and revenue of the company is CA$145 million and CA$391 million, respectively. In the same time the previous year, the gross profit of the company was CA$37 million.

All these statistics show the remarkable growth of the company for 2020. The company may also enter the U.S. market soon. The gaining of market share over its larger competitors will also continue. Hence, it can be really an excellent option for cannabis investors over the long term. 

Charlotte's Web Holdings (OTCMKTS: CWBHF)

Charlotte's Web Holdings is currently one of the leading brand names in cannabidiol wellness products. In 2019, the company sold hemp oil in over 21,000 retail locations. It results in a generation of 2.34 million pounds and a plantation of 862 acres.

The above statistics are impressive. However, the company has to face issues due to the lockdown of Covid-19 in the U.S. and Canada. The temporary shutting of retailers results in some loss for the company. The recorded revenue of Charlotte's Web Holdings in the first quarter of 2020 was $21.5 million. It's similar to the company's revenue in the same period of 2019, which was $21.7 million.

The retail presence of Charlotte's Web Holding is much better as compared to its competitors. Moreover, the company is continuously working to grow its production capacity. In 2018, the hemp planted by the company was approximately 300 acres. But the company managed to increase it by 187 percent in 2019, which was about 862 acres. The organization is also building a production facility of approximately 137,000 square feet in Colorado.

The company's recent product launches were also very successful, including CBD pet treats and CBD gummies. Prior to the pandemic, it  was one of the fastest-growing CBD oil producers. However, the company is still in a good position with a gross profit of 70 percent. Charlotte also has a small number of almost negligible debts. In fact, the company has a cash flow of around $53 million. The price-to-sales ratio of Charlotte's Web is roughly 6:5. Hence, one can expect that the company will grow at a sudden pace after the COVID-19 pandemic is over. As the leading company in the U.S. it's a good option for investors. Moreover, it is continuously making efforts to increase growth. Therefore, Charlotte's web can be an ideal option for individuals looking to make profits from the marijuana industry.

Conclusion

In recent years, many countries have legalized the sale of recreational marijuana. Several U.S. States are also following the same trend after the legalization of cannabis and shrooms in Canada. Hence, there is an excellent opportunity for investors in this industry and can potentially reap from huge profits. If you want to snag this big opportunity, then the above-mentioned stocks can be really helpful. They can help you to generate a good amount of profits in the long run.

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Crystal M. Wilson
Crystal M. Wilson

Crystal has been closely studying the cannabis industry trends from quite sometime. Intrigued by the booming growth of this sector, she takes interest in penning down her views providing quality insight on current marijuana trends, particularly medical cannabis.

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