The burgeoning Canadian cannabis sector is poised to receive a boost on the legalization of edibles in the summer. The legalization should lead to further expansion of the cannabis marketplace that is thriving following recreational use legalization late last year. Amidst the developments on the regulation front so are the likes of Canopy Growth Corp (TSE:WEED), Cannex Capital Holdings Inc. (CNSX:CNNX) and Aurora Cannabis Inc. (TSE:ACB) generating significant returns to shareholders.
Burgeoning Canada Cannabis Sector
After a roller coaster 2018, Canadian cannabis stocks have bounced back as investments into the sector continue to hit new higher highs. Retail and institutional investors have taken a keen interest in opportunities in the sector as cannabis sales continue to grow at an impressive rate.
Canada’s adult use market is poised to reach record highs of C$6.7 billion in value by 2023 as the medical market grows to C$700 million. Release of edibles and derivative products should give the market a fresh boost leading to vast opportunities worth pursuing.
Canadian Cannabis stock pick
Canopy Growth
Amidst the expected growth Canopy Growth, provides a reliable way of gaining exposure to the cannabis sector. The diversified multi-brand cannabis and hemp company boast of one of the largest licensed production platform in the country with over 600,000 sq. Ft. of production space. The company is on course to add 5 million sq. Ft. of production over the next 12 months.
Robust production capacity should allow Canopy growth to enjoy economies of scale as the race for sales in the sector heats up. With a market cap of $20.9 billion at a time when the cannabis sector is at an early stage of development affirms the company’s long-term prospects.
An 83% year to date return underscores the company’s ability to generate shareholder value. The stock is already up by more than 40% for the year and showing signs of edging higher as part of the long-term uptrend.
Aurora Cannabis
Being the second largest marijuana stock by market cap signals investors’ confidence about Aurora Cannabis prospects. Robust cannabis cultivation and production is what makes the company stand out.
The company’s market cap has more than doubled since the beginning of last year, and the share price has continued to trend higher in recent months. The company is on course to generate recurring positive EBITDA beginning the fourth quarter.
The stock is already up by more than 40% for the year and could be a potential breakout on the broader cannabis sector turning bullish. The company is positioned to be a leader in the growing market, having diversified its operations into other growing markets.
Cannex Group Holdings
Cannex Group Holdings is a Canadian cannabis company with tremendous potential. In addition to providing exposure to Canada’s cannabis sector, the company has also expanded its operations into the U.S, focusing on Washington and California. The company is an ideal pick for gaining exposure to premium indoor cultivation, extraction manufacturing, and branding of edible as well as derivative products.
The company is fresh from delivering a 223% increase in revenues in the recent quarter, affirming its revenue run rate credentials. While the share price is up by more than 20% for the year, it is yet to reflect the company’s long term prospects in the wake of a recent pullback.
