three Marijuana Stocks With a Killer Benefit — The Motley Fool


Let’s face it: Marijuana is a commodity. That tends to make it difficult for marijuana firms to differentiate themselves from the competitors. But it is not not possible to do so.

Really, 3 marijuana stocks seem to be in fantastic shape to stand out from the pack for a extended time to come. You could even say that Canopy Development (NYSE:CGC), Cronos Group (NASDAQ:CRON), and Scotts Miracle-Gro (NYSE:SMG) have a killer benefit. Here’s why.

Image supply: Getty Pictures.

1. Canopy Development

Canopy Development claims the largest market place cap of any marijuana stock on the planet. But that is not its killer benefit. As an alternative, Canopy’s connection with Constellation Brands (NYSE:STZ) is what elevates the enterprise above its peers.

Constellation is greatest recognized for its premium beers Corona and Modelo. In 2017, the enterprise purchased a 9.9% stake in Canopy. Final year, Constellation upped the ante significantly with an additional $four billion investment in Canopy Development. The deal offered a large influx of money to Canopy.

Canopy is currently placing that dollars to excellent use. The enterprise announced in January that it is constructing a key hemp production facility in New York state. Canopy expects to launch its initial hemp-primarily based cannabidiol (CBD) items in the U.S. later this year.

The enterprise also plans to leverage Constellation’s experience in establishing effective customer brands. Canopy and Constellation intend to launch a wide variety of cannabis-infused beverages in Canada in the latter aspect of 2019, assuming there are not any delays to the completion of the applicable regulations. And ought to federal marijuana laws alter in the U.S., Constellation’s distribution channels and advertising prowess would be a key asset for Canopy in getting into the U.S. marijuana market place.

two. Cronos Group

Cronos Group struck its personal key deal with a enterprise outdoors the cannabis market. In December, tobacco giant Altria (NYSE:MO) announced that it was investing $1.eight billion in Cronos for close to 45% of the Canadian marijuana producer.

This transaction closed on March eight, so it is nevertheless also early to know particularly how Cronos will use its newfound money. Cronos Group CEO Mike Gorenstein mentioned, although, that the deal with Altria will “enable us to expand our solution improvement and commercialization capabilities.”

Gorenstein also noted that Altria’s regulatory experience ought to allow Cronos to compete much more correctly in the worldwide cannabis market place. That appears like a quite excellent assumption. Altria has effectively navigated very regulated markets across the planet for decades.

Whilst Cronos Group’s partnership with Altria is its largest differentiating benefit, the enterprise also has an additional collaboration that could be a game changer. Cronos teamed up with Ginkgo Bioworks final year to create genetically engineered yeast strains that make higher-high-quality cannabinoids. If this method can be scaled up to meet industrial wants, Cronos could be in a superb position to make cannabinoids like CBD and THC much more swiftly and at a lot decrease expenses than present techniques enable.

three. Scotts Miracle-Gro

Scotts Miracle-Gro’s killer benefit is quite uncomplicated: It is the largest hydroponics supplier in the world’s largest legal marijuana market place. Thanks to a string of acquisitions, Scotts’ Hawthorne Gardening subsidiary ranks as the leading provider of hydroponics items to the U.S. cannabis market.

The enterprise is 1 of the greatest “picks-and-shovels” plays for the booming marijuana market place. Cannabis firms each massive and tiny turn to Hawthorne for items like plant nutrients, irrigation options, lighting systems, storage options, and ventilation systems. 

Scotts is poised to profit as the U.S. marijuana market place picks up momentum. That momentum is pretty much absolutely on the way as the cannabis markets in states that have legalized either healthcare or recreational marijuana mature. In addition, many other massive states seem probably to legalize recreational marijuana, building even much more possibilities for Scotts.

Whilst Scotts ought to appreciate powerful development more than the extended run from its Hawthorne subsidiary, the enterprise also continues to make a lot of dollars from its customer lawn and garden items enterprise. Its launch of a new line of organic items ought to give an additional enhance for Scotts this year.

A couple of drawbacks 

There are a couple of drawbacks with the killer positive aspects Canopy Development, Cronos Group, and Scotts Miracle-Gro appreciate. A single is that a lot of investors currently know about them. It is not an accident that all 3 of these stocks have soared so far in 2019.

It is also doable that the killer positive aspects could die an untimely death. Other marijuana producers could forge relationships with corporations outdoors the cannabis market that rival the offers created by Canopy and Cronos. Scotts could shed its leading status with U.S. cannabis growers.

For now, although, these 3 marijuana stocks stand out from the crowd. I assume they will all continue to be effective more than the extended run.


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