Investing in cannabis companies can seem risky. But cannabis companies span a range from pure-play direct-to-consumer sales to REITs that house growers and everything in between.
The industry offers enormous potential. In 2022, legal cannabis sales in the United States are estimated to hit $33 billion, up 32% from 2021 — and is projected to reach $52 billion by 2026. When you look under the hood of the cannabis industry, you’ll find some interesting businesses with solid growth.
So, this leaves us with the question of what cannabis stocks are deserving of your hard-earned savings?
Should You Invest in Cannabis in 2022?
As more states joined this movement, investments in cannabis became more enticing. Many investors saw the regulatory trajectory and figured some golden tickets lay ahead. However, the overall performance of cannabis stocks has been fair to poor thus far. This year in particular has been especially challenging for marijuana stocks.
It’s clear that expectations got ahead of reality and the valuations of cannabis stocks did not match underlying fundamentals — just as quickly as some stocks soared, they swiftly plummeted. In spite of the uphill sledding for investors this year, there are still opportunities, particularly following the recent sell-off.
If you are considering this industry, here are two top cannabis stocks to watch:
22nd Century Group
Although 22nd Century Group is not yet profitable, its diversified offerings means if one segment faces challenges others can carry the company forward. Where this biotech company shines is its ability to help other businesses make more money by increasing their yield by licensing its strains. For a fee, the company will also design new strains based on the client’s specifications.
If you’re specifically focused on how 22nd Century Group operates within the cannabis space, you’ll appreciate the innovation and practicality the company brings to the industry. It is creating blight- and pest-resistant plants, tweaking levels of specific psychoactive molecules, and calibrating aromatic molecules to adjust the scent of certain strains.
Although the stock technically sits in penny stock territory, analysts are highly bullish on it, placing a price target over 150% higher than the current trading price. If they’re right the stock could rocket as high as $5.33 per share.
NewLake Capital Partners
NLCP currently has holdings in eleven states, focusing on areas where cannabis licenses are limited. This strategy ensures tenants operate in a competitive landscape, encouraging greater success and reducing the risk of defaulting on rent.
Most recently, NLCP announced a $50 million investment across three properties in Nevada and Pennsylvania. This capital injection was fueled by the firm’s initial public offering and should help the company hit its goal of almost $45 million in revenue for the year. A higher dividend payout is also anticipated. As of this writing, NLPC pays an annual dividend yield of 7.87% — or a quarterly dividend of $0.35 per share.
Like many promising cannabis stocks, NLCP is a long-term play. It is at the beginning of its growth journey. As the cannabis market expands, so should NewLake Capital Partners.
And if analysts are right, this stock could double in value to its forecast fair market value of $33.25 per share.