Marijuana stocks could catch fire in 2022.
The Joe Biden presidency hasn’t been as fruitful for cannabis stock investors up to this point as many initially hoped it would be. However, cannabis stocks got a big boost on Oct. 6 when Biden announced a pardon for people convicted on federal charges of simple marijuana possession. Biden also called for a review of the way marijuana is federally scheduled as a controlled substance, and he urged state governors to follow his lead. The announcement is a far cry from federal legalization of marijuana, but investors may see it as a first step in the right direction. Here are seven marijuana stocks to buy in 2022, according to Cantor Fitzgerald.
Curaleaf Holdings Inc. (ticker: CURLF)
Curaleaf is a U.S. multistate operator, or MSO, that has 144 dispensaries and 29 cultivation sites in 21 U.S. states. Curaleaf is the largest U.S. MSO by revenue and is among analyst Pablo Zuanic’s top cannabis stock picks. Zuanic says Curaleaf trails other North American cannabis companies expanding into Europe, but its international sales were up 50% in the second quarter. In addition, he says 2022 U.S. sales are back-loaded given the company’s largest New Jersey store will soon begin recreational sales. Cantor Fitzgerald has an “overweight” rating and $13.70 price target for CURLF stock, which closed at $6.01 on Oct. 7.
Green Thumb Industries Inc. (GTBIF)
Green Thumb Industries is an MSO that operates 77 dispensaries in 15 U.S. markets. Green Thumb is one of the few cannabis stocks that has been consistently profitable, generating $24.4 million in net income last quarter. Zuanic says gross margins fell 1.2% in the second quarter, but New Jersey should be a significant long-term growth catalyst for Green Thumb. In addition, he says the company will continue to invest in growing U.S. markets that have attractive economics and potential for recreational cannabis legalization. Cantor Fitzgerald has an “overweight” rating and $31 price target for GTBIF stock, which closed at $13.25 on Oct. 7.
Trulieve Cannabis Corp. (TCNNF)
Trulieve Cannabis is primarily focused on Florida, where it dominates the medical marijuana market. The company also has leading market positions in Arizona and Pennsylvania. Zuanic says Trulieve is a top MSO, but its primary markets are more mature, lower-growth states. In fact, Trulieve generated just 1% sequential sales growth in the second quarter, lagging MSO peers. However, Zuanic says there has been renewed efforts to get recreational cannabis legalization on the 2024 ballot in Florida, where the company already has stable market share and pricing. Cantor Fitzgerald has an “overweight” rating and $54 price target for TCNNF stock, which closed at $12.09 on Oct.7.
Cresco Labs Inc. (CRLBF)
Cresco Labs is a U.S. MSO that holds leading market share in Illinois, Pennsylvania, Colorado and Virginia. Cresco is expanding its U.S. footprint aggressively, announcing a $2 billion buyout of Columbia Care Inc. (CCHWF) in March. In the difficult cannabis climate, Zuanic says Cresco is a best-in-class operator given its revenue per store, wholesale sales and market depth in key states. For now, Zuanic says the company’s focus is on closing the Columbia Care deal. Cantor Fitzgerald has an “overweight” rating and $15 price target for CRLBF stock, which closed at $3.43 on Oct. 7.
WM Technology Inc. (MAPS)
WM Technology is a somewhat unconventional play on the cannabis industry. Rather than producing and selling cannabis, WM Technology operates a leading online cannabis marketplace and provides e-commerce and compliance software solutions to the cannabis industry. Zuanic says WM’s sales growth will likely continue to lag the overall MSO group for now given the company’s high exposure to lower-growth, mature markets with higher store density. However, he says WM is a diversified bet on the long-term growth potential of the U.S. cannabis market as a whole. Cantor Fitzgerald has an “overweight” rating and $7 price target for MAPS stock, which closed at $2.07 on Oct. 7.
Irwin Naturals Inc. (IWINF)
Irwin Naturals is another somewhat unconventional play on cannabis. The company has been an herbal supplement formulator since 1994 and has expanded into both the cannabis and psychedelics space. Zuanic says Irwin plans to be the market leader in psychedelic mental health clinics, aiming to own 100 clinics by the end of 2023. Zuanic says the strategy is risky, but the psychedelics clinics market could be valued at $45 billion within five years. In the meantime, Irwin’s core business has been profitable for more than 27 years. Cantor Fitzgerald has an “overweight” rating and $7 price target for IWINF stock, which closed at $1.55 on Oct. 7.
Aurora Cannabis Inc. (ACB)
Four years after Canada legalized recreational cannabis nationwide in 2018, Canadian demand hasn’t met expectations and pricing pressures have made it difficult for producers to generate consistent profits. Aurora Cannabis shares are down a painful 97.5% for the past three years as of Oct. 7, but Zuanic says it’s finally time to buy the dip. Aurora is now among a handful of companies that are well positioned to take advantage of the German cannabis market, and Zuanic says Aurora will expand further into other European markets in the future. Cantor Fitzgerald has an “overweight” rating and $3 price target for ACB stock, which closed at $1.12 on Oct. 7.
7 best marijuana stocks to buy for 2022:
— Curaleaf Holdings Inc. (CURLF)
— Green Thumb Industries Inc. (GTBIF)
— Trulieve Cannabis Corp. (TCNNF)
— Cresco Labs Inc. (CRLBF)
— WM Technology Inc. (MAPS)
— Irwin Naturals Inc. (IWINF)
— Aurora Cannabis Inc. (ACB)
More from U.S. News
Update 10/10/22: This story was published at an earlier date and has been updated with new information.