According to the Chinese, 2018 will be the year of the dog. When it comes to marijuana stocks, though, I don’t expect there will be too many dogs in 2018. Actually, I suspect this could be the best year ever for many marijuana stocks.
Yes, I fully realize that Jeff Sessions has rattled the U.S. marijuana industry. But there are stocks based in other countries that are available for trading in the United States. And there are marijuana stocks that the attorney general’s actions shouldn’t affect.
My prediction is that several Canadian marijuana stocks will generate huge returns this year, assuming everything stays on track with legalization of recreational marijuana in the country. Several cannabinoid-focused biotech stocks should also be winners. But which is the best marijuana stock to buy? If I could only buy one marijuana stock, it would be (drum roll, please) GW Pharmaceuticals (NASDAQ: GWPH). Here’s why.
Looking at the long term
Let me first state something that might be confusing: I don’t think GW Pharmaceuticals will be the best-performing marijuana stock in 2018. It probably won’t even rank among the top five winners.
In December, I wrote that the top marijuana stocks to buy in 2018 were Canopy Growth(NASDAQOTH: TWMJF), MedReleaf (NASDAQOTH: MEDFF), and Aurora Cannabis(NASDAQOTH: ACBFF). I still think that’s true. The Canadian medical-marijuana market continues to grow. All three companies have expanded into international markets. And all three have tremendous production capacity to help meet what should be enormous demand when Canada legalizes recreational marijuana.
So why wouldn’t I choose one of those stocks as my personal pick? I like to invest for the long term.
While my take is that the Canadian marijuana stocks will skyrocket (again) this year and maybe next year also, the reality will set in sooner or later: Marijuana is a commodity. While demand outstrips supply, these companies and their stocks will perform really well. But it’s not hard to envision what will happen when supply catches up to demand, as it inevitably will. Stocks that carry valuations based on expectations of rapid growth will nosedive.
credit:finance.yahoo.com
