There is no doubt that marijuana stocks are highly volatile. However, it is in this volatility that money is made. If you are looking to profit from this high-growth industry in January 2023, then you have come to the right place.
In this analysis, we take an in-depth look at the top marijuana stocks that can help you diversify your stock portfolio while at the same time giving you a chance to profit in the process.
Best Marijuana Stocks For January 2023
With the growing adoption of marijuana for medical purposes and its legalization for recreation, demand is only set to go up. By extension, this means the prospects of top marijuana stocks look good.
On top of that, the marijuana industry is constantly in the news these days. This has generated a lot of hype around these stocks. As more investors enter the market, the hype around these stocks will only get stronger. In fact, the mainstreaming of marijuana is the key reason more States in the US are legalizing it. The same is also happening globally.
The marijuana industry has also been given impetus by the aggressive nature of the companies that have come to dominate this industry. While the industry is still young, there is a lot of cutting-edge research happening right now, with many companies expanding into adjacent areas like infused beverages, bulk sale terpenes, and digital inventory management systems. A lot has been achieved both on the medical front and in making marijuana a safe product to use for leisure.
The best part is that there is now an administration in the US that is pro-legal marijuana. Since President Biden came to power, the number of US States that have legalized marijuana has shot up. Some of the States that have legalized marijuana since Biden took over are South Dakota and Arizona. The number of states that are legalizing marijuana is only set to grow. This month, Ohio has joined the list of states whose legislative bodies are debating legalizing marijuana.
However, the big news that could completely transform the marijuana industry is legalization at the federal level. Existing regulations are difficult for marijuana companies and make it hard for them to open bank accounts or even get insurance. The proposal before Congress would eliminate these hurdles. The impact would be to open up the industry to levels it has never hit before.
Canada is already ahead in terms of marijuana laws, and Canadian companies now dominate the market. However, with the winds of change blowing across the US, American marijuana companies are set for exponential growth, too.
From an investor standpoint, all these developments make marijuana stocks among the hottest to watch in January and into 2023. With this background in mind, let’s now look at some of the top marijuana stocks for January that could give your stock portfolio a boost.
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The Top 5 Best Marijuana Stocks For January 2023:
To come up with this list of the top marijuana stocks for January 2023, we have used a mix of fundamental factors and technical analysis. In terms of fundamentals, we have considered factors that could affect revenues, such as innovations, expansion moves, or plans to diversify.
If you want to understand the cannabis market better, create some time, and go through our in-depth analysis of the top chosen cannabis stocks below.
1. HEXO Corp (HEXO)
Like all other stocks, the best way to make money off Cannabis stocks is to buy low and sell high. HEXO (HEXO) comes off as a stock in a buy zone by applying this logic.
HEXO is trading at multi-month lows, and in the past few months, selling volumes have declined. We believe this indicates that the selloff that started back in June is easing up.
It is not hard to see why HEXO is about to turn a corner in its price from a look at the fundamentals. The vertically integrated cannabis company has been moving to streamline its operations for cost efficiency and revenue growth.
HEXO started the process of streamlining operations by decommissioning three sites. The three sites are part of 48 North Cannabis Corp, which HEXO bought off. The decommissioning allows for more centralized cultivation, processing, and distribution.
The efficiency that HEXO will derive from a more centralized cannabis production is likely to reflect in its revenues going into 2023.
Besides the potential from the regularization of 48North Cannabis Corp and Zenabis Global Inc operations, HEXO’s financials paint a picture of a company on a growth trajectory.
In October 2021, HEXO reported its Q4 results, which are pretty impressive. At the time, HEXO reported that net sales grew by 71%, compared to Q3. The results also represented an increase of 43% compared to Q4 of 2020.
HEXO also reported that its total revenues for the whole financial year 2021 shot up by 53% compared to results from the year 2020. However, the most important thing to note from HEXO’s Q4 results is its market dominance.
HEXO reported that despite the increased competition in the Cannabis market, it continues to maintain market dominance over other players in the industry. This is a pointer to HEXO’s understanding of the cannabis market and a strong focus on meeting consumer needs.
With more States in the US legalizing the medical and recreational use of Marijuana, HEXO’s high market share could see it grow revenues, which will reflect in its price over time.
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2. Village Farms International Inc (VFF)
Cannabis prices, like all other commodities, are subject to high price volatility. That’s why it is logical to go for Cannabis companies with diverse product offerings.
Using diversification as a metric to get a mix of safety and growth, Village Farms International (VFF) stands out among the top marijuana stocks to buy in January.
Village Farms has a pretty diverse product offering. Aside from cannabis, Village Farms also produces tomatoes, cucumber, and a host of other vegetables. That said, Village Farms forays into cannabis have been quite successful.
Per its Q3 2021 results, Village Farms announced that net income grew by 43.3% compared to a similar quarter in 2020. The best part is that Village Farms delivered these exemplary results from a basket of products. Of the total net income for Q3, only 43.1% came from Cannabis sales.
While past results don’t necessarily guarantee future success, especially in agriculture, there is a reason to be excited for VFF going forward. On November 18th, Village Farms announced that its cannabis and other farm produce operations in British Columbia and Delta had not been affected despite terrible weather conditions. Village Farm announced that it had taken measures to ensure that its greenhouse operations continued as normal.
Essentially this means revenues for Q4 will be as Village Farms had projected, and that’s a bullish signal for VFF.
Aside from taking measures to protect revenues in the short term, Village Farms is also working on expanding its market share. Village Farms announced that it had bought 70% of LifeScience, a top vertically-integrated cannabis company based in Quebec in mid-November.
The acquisition gave Village Farms a strong presence in Quebec, one of the most important cannabis markets in North America. Quebec consumes about 15% of all the cannabis produced in Canada. This means VFF investors can expect higher revenues going into 2023 and beyond.
With all these factors in VFF’s favour, the price action seems to be responding well. After several months of heavy selling, VFF’s January price action shows a potential bullish reversal pattern.
If the price keeps edging higher over the next few weeks, we believe a rally could follow. The rally could be triggered by a realization of the benefits of adverse weather mitigation and the purchase of LifeScience.
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3. GrowGeneration Corp (GRWG)
GrowGeneration Corp (GRWG) has been one of the best cannabis stock performers this year. Its revenue growth rate over the past year stands at over 110.9%.
While announcing its Q3 results, GrowGeneration reported that year-over-year net income also increased by 20%. GrowGeneration stated that its strong results were driven by online sales, private label purchases growth, and inventory of in-demand products.
A number of these factors will likely keep GrowGeneration revenues up in the future. For instance, the world is accelerating to online shopping, and cannabis shopping is no exception. This is a positive leading indicator of the direction GrowGeneration could go in 2023 and beyond.
At the same time, with the cannabis market on a growth trajectory, especially in the US, entrepreneurs looking to capitalize on this market will increase as well. The result could be an increase in the demand for private label purchases as has been seen in 2021. Given that GrowGeneration is already established in this market, it is likely to derive a sizeable portion of its revenues off it.
GrowGeneration is already making moves that will see it profit from this fast-growing market. On January 6th, GrowGeneration announced that it was moving its Phoenix, Arizona store to a new 25000 Square Foot facility. The new facility has some of the best hydroponics and other cannabis production technologies and will see GrowGeneration grow its private-label business.
However, the best aspect of GrowGeneration is that it doesn’t just sell cannabis, it also serves cannabis producers. GrowGeneration is a leading producer of cannabis production technologies such as farming soils, hydroponic equipment, plant nutrition, lighting technology, and aquaponics tools. Essentially, this means the company gets to make money even when volatility is high in the cannabis market.
With all these factors in its favour, we believe GrowGeneration is trading at a low-risk price level.
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4. Sundial Growers (SNDL)
Marijuana stocks are highly volatile, but some like Sundial Growers (SNDL) are more volatile than others. That said, we still believe it is a top stock to watch this January. Here’s why.
Sundial’s high risk stems from its prospects being heavily tied to US regulations. As such, a slight change in regulation could send it tanking. That said, the US regulatory environment has been getting better when it comes to cannabis. This is evident in the number of states that are legalizing the recreational use of marijuana. For this reason, we believe Sundial Growers has good prospects going into 2023, despite being heavily reliant on external factors.
We are also betting on the changes that Sundial made earlier this year in the structure of its operations. The company adopted a two-pronged strategy that is spearheaded by a cannabis cultivation unit and a production unit. This is likely to drive Sundial more towards diversification and grow its revenues over time.
In the short term, Sundial is also likely to get a boost from the upcoming IPO of its investment arm called Sunstream IVXX Investment Corp. Once it goes public, Sunstream will be primarily focused on investing in cannabis companies. Besides the excitement that Sunstream could generate for Sundial short-term, it will add to its revenue streams. This is a boost to the intrinsic value of SNDL, and the same will reflect in the price over time.
Besides the strong fundamentals that all point to growth, the technicals also point to SNDL being a growth stock. Most cannabis stocks have been tanking over the past few months.
While SNDL has tanked like the rest of them, selling volumes have declined over the last couple of months. In fact, between November and January, selling volumes have pretty much dried up.
This means a bullish reversal could be in the offing. The key trigger to this could be the upcoming IPO of its investment arm, Sunstream. If its price bounces off the $0.5 support, the potential upside is huge, with the first key target being $0.80. That would be an increase of over 100% if it happens. SNDL stands out among the top marijuana stocks to buy in January for such potential.
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5. Tilray Inc (TLRY)
When listing the top marijuana stocks for January, Tilray (TLRY) cannot miss in the list, and for a good reason.
Tilray has made several strategic moves this year that could propel its stock price going into 2023. This month alone, Tilray has made two moves that have given its stock price a boost throughout the first week of January.
One of them is the launch of fast-acting cannabis oral strips, a move that has been hailed as a huge boost to medical cannabis innovation. Tilray announced that the strips will have a thin strip containing cannabinoids. These cannabinoids are edible and can be used for relieving pain, among other health issues.
Considering that the use of cannabis for dealing with health issues is on the rise, this is a big move. It’s a move that could boost the value of Tilray in the long run.
Another big announcement from Tilray is its entry into the THC beverages market. On January 8th, Tilray announced that it had bought Breckenridge Distillery in readiness for cannabis legalization by the federal government in the US.
While announcing the deal, Tilray announced that the deal would drive up its EBITDA. The CEO Irwin D. Simon also stated that the move will help diversify the company’s portfolio in the US and globally.
We believe that the move to buy out Breckenridge will add to the intrinsic value of Tilray and will boost it going into 2023.
At the same time, Tilray’s books are healthy for a company in a highly volatile market like the cannabis market. For instance, Tilray has a current ratio of 1.60. This means it has more than enough resources to cover its short-term debt obligations. It also means that if an opportunity to invest arises, it can leverage and capture it.
Looking at its price action, TLRY is in a buy zone at the moment. There is a good chance of TLRY testing $15.20 at some point in 2023.
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How To Invest In Cannabis Stocks
Up to this point, you have a pretty good idea of the workings of the cannabis industry and some of the best marijuana stocks to buy. The next important step is how to have skin in the game in this volatile but profitable industry.
Buying marijuana stocks, or any other stocks for that matter is not rocket science. The trick is to find a good broker whose interests are aligned with yours.
Many brokers give you all kinds of enticing offers just to part you with your money. To safeguard your capital, always make sure that the broker you want to invest with is regulated and licensed. One of the best online trading platforms, especially for new investors, is eToro.
This top online trading platform is designed for ease of use. The layout is simple for anyone to understand, and it has a lot of tools that can help you build the confidence to trade stocks.
Opening an account is super easy too, and pretty much anyone with the basics of using a computer can open an eToro account. Once you have gone through the sign-up process successfully, you are ready to buy stocks.
To start your investing journey, you need to make a minimum deposit of just $200. That does not mean that your account will be closed if you don’t deposit. You will have access to your account and all the trading tools available until you are ready to deposit and trade.
The platform also constantly gives investors educational materials to help them better understand the financial markets. With a little dedication on your part, these educational materials can help you go pro within a very short time.
At eToro, you are in good company too. The platform has more than 12 million users and leverages the power of these numbers to help investors improve their odds of success. For instance, with the eToro social trading feature, you can check out what other investors have to say about a particular stock before investing.
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Marijuana Stocks For January – Key Points
- Top Marijuana stocks have good prospects for growth going into 2023 and beyond.
- The cannabis industry is set to benefit from the improving regulatory environment in the US.
- There is a proposal in Congress to make the legal framework more favourable to the cannabis industry.
- It is easy to invest in marijuana stocks when you use eToro. It is a top trading platform that allows you to start investing in marijuana stocks in a matter of minutes.
- Choosing a good broker is the first step to successful investing.
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