Should You Buy TSX Stocks for Cannabis 2.0?

On October 17, new cannabis products became legal, marking the arrival of Cannabis 2.0 in Canada for stocks such as Canopy Growth (TSX:WEED)(NYSE:CGC).

| More on:

Big-name Canadian cannabis corporations have made some exciting announcements about new foreign licensing and acquisitions. Popular Toronto Stock Exchange stocks such as Canopy Growth (TSX:WEED)(NYSE:CGC) and Aurora Cannabis (TSX:ACB)(NYSE:ACB) are among those with huge announcements the past couple weeks.

On October 17, a new line of cannabis products became legal in Canada, marking the arrival of Cannabis 2.0. Cannabis 2.0 is the legalization of edibles, cannabis-infused beverages, and cannabis concentrates. As a result, marijuana stocks were up in the past week.

Here’s what you need to know about the cannabis industry.

Canopy Growth

Canopy Growth has expanded its production of medical cannabis treatments in the United Kingdom and Luxembourg. Spectrum Therapeutics, a U.K. subsidiary, has made progress in reducing delivery time to augment the company’s competitive advantage.

Delivery time is a top priority for e-commerce customers. People and businesses who shop online prefer quick delivery times and are willing to pay for the convenience. Thus, streamlining supply chain logistics is critical for remaining competitive in today’s business landscape.

Moreover, in Luxembourg, Canopy Growth has secured exclusive opportunities to supply medical cannabis from its licensed facilities in Denmark until December 2021. In 2018, Luxembourg decriminalized medical marijuana with severe medical conditions, which may require nontraditional treatment methods to manage troublesome symptoms.

Last Tuesday, Canopy Growth opened at $25.40 per share and has since risen by 5%. Today, the stock is selling for $26.63 at the time of writing. The boost was minor after the stock lost over 50% of its value this past year in a downward correction.

Canopy Growth was drastically overvalued after Cannabis 1.0. It may be reaching a buying opportunity now that it has lost so much of its gains. The downside is that many other cannabis stocks are still far from the value of Canopy Growth.

Using Aurora Cannabis as a benchmark, Canopy Growth is likely still too expensive. At this time, investors should wait. 

Aurora Cannabis

Aurora Cannabis will begin selling vapes, concentrates, and edibles in December. The edibles should be a huge seller in the Canadian market. Aurora will be selling gummies, chocolates, baked goods, and mints.

To ensure the highest-quality products, Aurora has partnered with JACEK Chocolate Couture, WG Pro-Manufacturing, and Touché Bakery. Edibles have higher margins than many other cannabis products. The introduction of these items into Aurora’s inventory should boost what is already stellar financial performance from this medical marijuana company.

Aurora Cannabis has not gained in value since October 17. Today, the stock sells for $4.66 on the TSX. One month ago, it sold for almost $7. Despite this decline in price, investors should not shy away from purchasing some of this stock.

Foolish takeaway

Even though Canopy Growth is more than likely too expensive to purchase, Aurora Cannabis stock is still an excellent opportunity to profit from Cannabis 2.0. Now that edibles and concentrates are officially legal in Canada, cannabis investors have even more ways to benefit from this newly legal industry.

Canopy Growth is still a great stock to keep an eye on. Any enterprise partnering with Seth Rogen to deliver quality pot is a great investment opportunity.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Debra Ray has no position in any of the stocks mentioned.

More on Stocks for Beginners

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Emerging Canadian AI Companies With Big Potential

These tech stocks are paving the way to an AI-filled future, but still offer enough growth ahead for a strong…

Read more »

Young Boy with Jet Pack Dreams of Flying
Tech Stocks

Is Constellation Software Stock a Buy, Sell, or Hold for 2025?

CSU stock has long been a strong option for high growth, high value stocks. But are there now too many…

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

Asset Management
Stocks for Beginners

TFSA: 4 Canadian Stocks to Buy and Hold Forever

Thinking about what to buy with the new TFSA contribution space in 2025? These four Canadian stocks are worth holding…

Read more »

concept of real estate evaluation
Stocks for Beginners

2 No-Brainer Real Estate Stocks to Buy Right Now for Less Than $1,000

These two real estate sector-focused stocks have the potential to deliver strong returns on your investments in the coming years.

Read more »

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

stocks climbing green bull market
Stocks for Beginners

3 TSX Stocks Soaring Higher With No Signs of Slowing

Don't ignore stocks just because they look like they're at a high price. Instead, see exactly why they've driven so…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »