Apart from the initial overhype, the marijuana industry in Canada has mostly been bearish. Many of the major players in the industry have seen their market capitalization erode to a fraction of their peak valuation. However, these companies still retain their fundamental strengths like innovative facilities, market recognition, a healthy regional presence, etc.
Even with these strengths intact, the most positive push upward is expected to come from strong market optimism, and the most compelling catalyst for that would be the U.S. federal government legalizing marijuana. If that happens, several cannabis stocks in Canada may experience explosive growth.
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Cronos stock
Cronos Group (TSX:CRON) is a Toronto-based company with three brands under its name and a decent international presence. One of its brands is closing up shop, but the company still owns the assets and all the IPs (intellectual property) associated with it. Of the remaining two brands, one is focused on recreational (including edibles) while the other is health oriented.
The stock has lost over 91% of its value in the last five years alone (from its 2019 peak). Even though it’s highly unlikely that the company may regain its peak value again, even a relatively small surge can help investors double their capital. If the bullish phase continues for a long, the stock may offer exceptional returns to its investors, provided they stick with this relatively risky investment for a while.
Tilray Brands
Tilray Brands (TSX:TLRY) was the result of the merger of a U.S. and a Canadian cannabis company, which was supposed to create one of the largest entities in the global Cannabis market. The stock performed well for a while, but following the bear market phase of the rest of the marijuana industry, it fell hard and lost over 91% of its value.
Tilray has multiple brands under its name and covers both the healthcare and recreational segments of the market. It also has international-market-specific brands and a presence in multiple promising markets, including Europe and Australia.
This international presence means that it doesn’t just rely on U.S. federal marijuana legalization for explosive growth. If it gains enough traction in any of its regional markets, that may carry the stock ahead of the rest of the sector still struggling with the black market.
Aurora Cannabis
Aurora Cannabis (TSX:ACB) was one the leaders of the pack — i.e., the Canadian publicly traded cannabis companies. At its peak, the stock traded for over $160 a share. Now it’s a micro-cap company trading below $1 per share. It has fallen by over 60% in the last 12 months alone, and the downward motion does not seem to stop.
Its portfolio of various brands is still impressive — 10 companies in both adult-use and medical domains. Most of its brands have a strong regional presence, but the company may be equipped to benefit from a U.S. legal marijuana boom. As a penny stock, Aurora may offer explosive growth opportunities in the right market conditions.
Foolish takeaway
All three cannabis stocks represent companies that, despite their aggressive devaluation, are among the largest players in the North American cannabis industry. If a positive catalyst makes the market more optimistic about Cannabis stocks, these three may be the first to ride the bullish train and may do so at an explosive pace.
