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Marijuana Stocks Could Be the Big Winner on Election Day: 4 to Buy Now

24/7 Wall St. logo 24/7 Wall St. 10/20/2020 Lee Jackson

a close up of a green plant © Provided by 24/7 Wall St. At the turn of the century, if you had told somebody that recreational marijuana would be legal across many states in this country, they probably would have laughed. Nobody is laughing now as the industry continues to grow at a breathtaking pace. Currently, the District of Columbia and 11 states (Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont and Washington) have adopted the most expansive laws legalizing marijuana for recreational use.

Marijuana multistate operators have grown dramatically over the past few years, but a massive catalyst is right around the corner that could give the industry a boost. This catalyst could really be the tipping point for some of the bigger states, especially those on the east coast, and the election is just two short weeks away.

A Democrat in the White House seemingly would be a very positive catalyst for the industry, as Senator Harris has already said a Biden administration would legalize recreational use and expunge marijuana convictions for possession for personal use.

The truly important votes will be in the states where recreational marijuana will be on the ballot. Arizona and New Jersey are the most notable potential adult-use states, together making up over 5% of the U.S. population. In particular, many on Wall Street are focused on New Jersey, where the state could prove to be a domino to nearby states legalizing cannabis, including New York, Pennsylvania and Connecticut. The proximity of New Jersey to those states could bring in the potential for millions of customers.

We screened our 24/7 Wall St. research database looking for stocks that were rated Buy at major Wall Street firms. We found four that make sense for aggressive investors now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Aphria

This company is very close to achieving positive cash flow. Aphria Inc. (NASDAQ: APHA) engages in the production and supply of medical cannabis. It operates through the following segments.

The Cannabis Operations segment produces, distributes and sells both medical and adult-use cannabis. The Distribution Operations segment's operations are carried out through its wholly owned subsidiaries: ABP, FL Group and CC Pharma. The Business Under Development segment includes operations in which the firm has not received final licensing or has not commenced commercial sales from operations.

Cantor Fitzgerald has an $11.75 price objective on the shares. Note that no Wall Street consensus was posted for any of the companies we researched. Aphria stock closed Monday's trading at $4.68 per share.

Aurora Cannabis

This company has made a string of acquisitions to grow the scale of its overall business. Aurora Cannabis Inc. (NYSE: ACB) produces and distributes medical cannabis products. It is vertically integrated and horizontally diversified across various segments of the cannabis value chain, from facility engineering and design to cannabis breeding, genetics research, production, derivatives, high value-add product development, home cultivation, wholesale and retail distribution.

The company's products consist of dried cannabis and cannabis oil, CanniMed vegan capsules and hemp products, as well as sells vaporizers, consumable vaporizer accessories and herb mills for using herbal cannabis products. It also operates CanvasRX, a network of cannabis counseling and outreach centers, and it provides cannabis analytical product testing services.

The Cantor Fitzgerald price target is a gigantic $18, and Aurora Cannabis was last seen trading at $4.71 a share, which is very near a 52-week low.

ALSO READ: 5 Great Stocks Under $10 With Massive Upside Potential

Canopy Growth

This is among the largest marijuana companies based on market capitalization. Canopy Growth Corp. (NYSE: CGC) engages in growing, possession and sale of medical cannabis in Canada. Its products include dried flowers, oils and concentrates, softgel capsules and hemps. The company offers its products under the Tweed, Black Label, Spectrum Cannabis, DNA Genetics, Leafs By Snoop, Bedrocan Canada, CraftGrow and Foria brand names

The company also offers its products through Tweed Main Street, a single online platform that enables registered patients to purchase medicinal cannabis from various producers across various brands. The company was formerly known as Tweed Marijuana and changed its name to Canopy Growth in September 2015.

The $22.62 BofA Securities price target on Canopy Growth stock compares with Monday's close at $19.81 per share.

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Cronus

This global cannabis company had a major international company take a large position late in 2018. Cronus Group Inc. (NASDAQ: CRON) was founded in 2012 and is based in Ontario, Canada. It has a presence across five continents, and its principal activities are the production and sale of cannabis and cannabis-derived products in federally legal jurisdictions.

Back in December of 2018, Altria agreed to buy a 45% stake in the company for about $1.8 billion, a sign of the new world in which the tobacco company must compete. This strategic partnership provides Cronos with additional financial resources, product development and commercialization capabilities, as well as deep regulatory expertise, to better position the company to compete, scale and lead the rapidly growing global cannabis industry. The stake also gives Altria the option to increase to full ownership if it so chooses down the road.

Raymond James has set a $10 price target, while Cronus stock closed at $5.75 per share on Monday.

The bottom line for investors is that when the Pandora's box for the industry was opened, it most likely it will never be shut again. While the huge dramatic moves some of the top stocks made a few years back, when Canadian legalization was at the forefront, may be history, there is good reason to add some of the top stocks in the industry to aggressive growth portfolios, especially in front of elections that could be very positive for the industry.

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