Dec 30, 2020 by MBERGER
2020 was a challenging year for the global economy and we are hoping that 2021 is a bounce back year for it. The COVID pandemic has put considerable pressure on companies, large and small, and the cannabis sector has not been unaffected by the spread of the virus.
Although cannabis was declared to be an essential industry in the US during the pandemic, consumer spending patterns have been impacted by the pandemic.
In the cannabis sector, we are seeing a major transition in the types of cannabis products that are preferred by consumers. During the last few years, we have noticed an increase in the number of consumers who are using vape pens or edibles instead of cannabis flower. This is a significant trend and we have been working to identify companies that are levered to this trend.
Today, we have highlighted 10 cannabis companies that we believe are poised to record strong growth in 2021. We are going to closely follow these operators in 2021 and believe that our readers need to be aware of these companies.
Canopy Growth Corporation (WEED.TO) (CGC) has the strongest balance sheet when compared to every other company that is in the industry and has attractive leverage to emerging international markets. Canopy Growth is positioned to capitalize on a change in legislation in the US and is an operator that we are bullish on over the long-term.
HEXO Corporation (HEXO.TO) (HEXO) recently completed a 4-for-1 reverse stock split and is an operator that we have been closely following. Many analysts consider the company to be one of the greatest turnaround stories of 2020 and attribute its success to the relationship that it has with Molson Coors (TAP.CN). The companies are focused on the cannabis beverage market and this is an opportunity to be aware of.
Fire & Flower Corporation (FAF.TO) (FLFWF) has been highly focused on the Canadian cannabis retail market and has been acquiring assets to increase market share in key provinces across the country. The company recently reported quarterly earnings that showed strong growth and we expect this trend to continue as new stores open. Fire & Flower was highly impacted by the pandemic and we are impressed with how the business held up during this time.
GW Pharmaceuticals plc (GWPH) is a leading biotech firm that is focused on creating cannabis-based therapies and is an operator that we are bullish on. During the last year, GW has been reporting strong revenue growth and we expect this trend to continue in 2021. The company is working on bringing new therapies through the FDA clinical trial process and the approval of an additional product will serve as a substantial catalyst for growth.
Innovative Industrial Properties, Inc. (IIPR) is the largest cannabis focused US real estate investment trust (REIT) and has been very active from an acquisition standpoint. The company owns more than 65 properties with approximately 5.4 million square feet of rentable which are99.3% leased. The company has been raising capital and acquiring properties and this is a trend that we expect to continue in 2021.
Cardiol Therapeutics Inc. (CRDL.TO) (CRTPF) is a clinical-stage biotechnology company that is focused on the research and clinical development of anti-inflammatory therapies for the treatment of cardiovascular disease (CVD). Cardiol recently appointed Worldwide Clinical Trials as it contract research organization (CRO) ahead of its plan to initiate a Phase II/III clinical trial on high-risk patients who are hospitalized with COVID-19. Although the company’s recent trend has been to the downside, we believe that Cardiol represents a differentiated growth opportunity.
MariMed Inc. (MRMD) is a US cannabis company that has been gaining momentum into the end of the year. 2020 was an especially challenging year for MariMed and we will be keeping an eye on how the story advances in 2021. From a communications standpoint, the company has been relatively quiet in 2020 and this is a trend that we want to see change in 2021. We believe the lack of awareness has negatively impacted the company and consider the risk-reward profile to be favorable at current levels.
Aleafia Health Inc. (AH.TO) (ALEAF) is a Canadian cannabis producer that has been executing on a multi-faceted growth strategy. During the last year, the company has recorded impressive top and bottom line growth and this is a trend that we expect to continue in 2021. Aleafia Health has been focused on several attractive verticals in the cannabis sector and we will monitor how it continues to build up its presence in strategic international markets.
WeedMD Inc. (WMD.V) (WDDMF) is a Canadian Licensed Producer (LP) that has been under considerable pressure and is an opportunity that we will be following in 2021. In 2019, we visited the company’s facility and were impressed with the operation. Since our visit, WeedMD has expanded into Canada’s cannabis 2.0 market and this is a vertical that we are favorable on. Although the market seem to have written off the business but believe that it is an opportunity that is worth watching.
Sundial Growers (SNDL) recorded volatile price movements in the last two months and is an opportunity that we continue to follow from the sidelines. We are cautious with Sundial due to the number of shares it has outstanding and the volatility that is associated with the stock. We believe there are better opportunities available in Canada but will continue to follow the trend.
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