Marijuana stocks have been having a great year in 2019. After a series of earnings reports showing massive sales boosts from the beginning of adult consumer use sales, Canada’s weed producers have gone on another epic rally. Although top weed stocks like Canopy Growth (TSX:WEED)(NYSE:CGC) still haven’t quite touched their 2018 highs, they’re getting there, and good earnings news could easily kick off a raging bull.
This past month has seen marijuana stocks cool off somewhat, with Canopy in particular down about 14% compared to late April. However, that doesn’t change the fact that 2019 has so far witnessed an explosion in the value of Canada’s pot sector. This year, some of the top weed stocks have nearly doubled in value, while many others have had more modest but still market-beating returns. The following are the three best-performing weed stocks of the lot.
OrganiGram Holdings (TSXV:OGI) In terms of sheer capital gains, OrganiGram holdings has been the best-performing weed stock of 2019, with an 89% return so far. OrganiGram’s strong performance has been driven by extraordinary revenue growth: in its most recent quarter, the company’s sales soared by 693% to $33 million. The company failed to turn a profit on those earnings, instead bringing in a $6 million net loss; however, early stage startups like this one are usually valued based on revenue rather than net income or diluted EPS. On that score, the company is a clear winner.
Aurora Cannabis (TSX:ACB)(NYSE:ACB) Aurora Cannabis is the second best-performing cannabis stock this year, up about 65% year to date. The company’s strong gains are attributable to its revenue growth, which reached 343% in the company’s most recent quarter. Aurora’s Q3 results actually missed analyst expectations, and the stock has been falling for the past month or so, but still, triple-digit revenue growth is nothing to sneeze at. The company is also growing revenue quarter on quarter, with its Q3 sales coming in 21% higher than Q2.
Canopy Last but not least, we have Canopy. This stock was doing better than Aurora for most of this year, but a steep selloff in May put Aurora’s year-to-date gains ahead. Regardless, Canopy is still the third best-performing stock in its sector this year, up 50% year to date (as of this writing).
Canopy’s returns have been driven by strong revenue gains and increasing profitability. In Q3, it reported net revenue growth of 280% year over year and a profit of about $74 million. These are pretty solid results, and while it should be mentioned that Canopy still had an operating loss in Q3, that loss was smaller than the one posted in Q2. This shows an enterprise that’s not only growing sales but inching closer and closer to regular profits, which is a rare feat in the fast-growing but cash-intensive cannabis industry.
Fool contributor Andrew Button has no position in any of the stocks mentioned.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019