After bursting onto the scene several years ago with considerable fanfare, much of the hype about cannabis stocks has quietly died down, and share prices have largely followed suit. Here, we’ll examine three profitable and low-cost cannabis-related stocks that supply investors long-term value and potential upside: Turning Point Brands (TPB), Aurora Cannabis (ACB), and Jazz Pharmaceuticals (JAZZ).
Having been illegal for a long time, cannabis is seeing the sunshine of day following spates of deregulation across the U.S., Canada, Australia, and Europe over the past decade. Cannabis stocks, otherwise often called pot stocks, have understandably emerged to mop up the large pent-up demand for cannabis products. Whether or not it’s medicinal, industrial, or recreational, the cannabis market is now a industrial entity being monetized across the U.S. and Canada.
Within the U.S., after an initial sentiment boost following legalization, the cannabis market has cooled. The AdvisorShares Pure US Cannabis ETF (MJUS), which tracks U.S. cannabis stocks, traded at over $50 a share in early 2021 but now trades for just $2.68. Tilray Brands (TLRY), certainly one of the earliest and most hyped pure-play publicly traded cannabis firms, traded for over $145 a share in late 2018 but today is priced at lower than a dollar. It’s hard to understate how poorly lots of these pure-play cannabis stocks have performed.
Tilray (TLRY) vs. S&P 500 (SPY)
While it has been a difficult space to take a position in, the industry still harbors potential — recreational marijuana is now legal in 24 U.S. states (plus Washington D.C.), while medical marijuana is legal in 39 (that said, it’s vital to notice that it continues to be classified as a Schedule 1 Drug by the Federal Government). Grand View Research predicts the worldwide legal cannabis market will grow to $102 billion by 2030, suitable for a formidable 25.5% CAGR.
For investors still excited about the industry and gaining exposure to the space, the excellent news is that the sector has matured, and there are many revolutionary ways to take a position in it quite than speculating on questionable stocks with little earnings.
Turning Point Brands (TPB) is an interesting solution to enter the cannabis space. While it isn’t a pure-play cannabis company, it sells Zig-Zag rolling papers and is a component of the industry. Additionally it is included in Recent Cannabis Ventures’ Global Cannabis Stock Index.
Unlike lots of its peers, it has performed quite well, nearly doubling over the past 12 months. Nonetheless, unlike a few of these peers, Turning Point is profitable, and even after this massive rally, it is definitely reasonably low-cost, trading for under 19x 2025 earnings estimates, a slight discount to the broader market.
Turning Point offers each momentum and value and has much potential going forward. Along with rolling papers, the corporate sells nicotine pouches under the FRE brand. Most notably, last 12 months, Turning Point launched a high-profile 50/50 three way partnership with Tucker Carlson Media to begin a recent nicotine pouch brand called ALP. This move garnered significant publicity as Tucker Carlson has a big following as one of the popular (if polarizing) figures in U.S. media, giving ALP a big platform and high visibility. Nicotine pouches have rapidly gained popularity lately, with products like Zyn becoming a significant hit for Philip Morris (PM). Between the recognition of nicotine pouches and Carlson’s ability to sell ALP to his audience, ALP has plenty of growth potential going forward.
I like Turning Point as a sensible solution to play the cannabis space since it offers strong diversification. Investors get exposure to cannabis through Zig-Zag and diversification into other revenue streams because of its nicotine pouch businesses.
On Wall Street, TPB earns a Strong Buy consensus rating based on three Buys, zero Holds, and nil Sell rankings assigned prior to now three months. The average analyst TPB stock price goal of $81.67 implies a 43% upside potential from current levels.
Aurora Cannabis was among the many buzziest stocks of the initial cannabis stock boom, reaching nearly $150 a share in 2021. Nonetheless, the stock has fallen precipitously since then, losing nearly 95% of its value over the past five years.
Nonetheless, there are some green shoots of life here. After years of losses, the stock is up nearly 20% over the past 12 months. The corporate recently reported a record adjusted EBITDA of $7 million last quarter as its pivot from specializing in the Canadian recreational market to the more lucrative and high-margin international medical market began to bear fruit. This was evidenced by revenue from the worldwide market surging 93% and surpassing Canadian revenue for the primary time.
Along with becoming profitable, Aurora can also be reasonably low-cost—shares trade for a really reasonable 17.8x 2025 earnings. While this continues to be a speculative stock based on its spotty history, its valuation and swing to record profitability based on its strategic shift make it an intriguing speculative opportunity for risk-averse investors. Plus, sell-side analysts foresee monster upside potential ahead.
Turning to Wall Street, ACB earns a Moderate Buy consensus rating based on two Buys, one Hold, and nil Sell rankings assigned prior to now three months. The average analyst ACB stock price goal of $7.10 implies a 58% upside potential from current levels.
Lastly, let’s examine Jazz Pharmaceuticals ($ JAZZ) as a special solution to gain exposure to the cannabis market. To be clear, Jazz Pharmaceuticals isn’t a pure play on cannabis because it is a diversified biotech company with an $8.5 billion market cap. Nonetheless, it offers significant exposure to cannabis because of its 2021 acquisition of GW Pharmaceuticals, which added CBD-based epilepsy drug Epidiolex to its portfolio. The successful drug is now approaching $1 billion in annual sales and is approved in dozens of nations worldwide.
Along with Epidiolex, Jazz’s product portfolio includes many other drugs focused on sleep disorders and oncology. I like that this offers investors diversification and extra revenue streams outside of cannabis. What’s more, shares of Jazz are pretty low-cost. With analysts projecting the corporate to earn $23.42 per share in 2025, the stock trades for just six times 2025 earnings estimates.
Turning to Wall Street, JAZZ earns a Strong Buy consensus rating based on seventeen Buys, one Hold, and nil Sell rankings assigned prior to now three months. The average analyst JAZZ stock price goal of $193.82 implies a 40% upside potential from current levels.
While many cannabis stocks have developed a foul fame after falling drastically from their lofty 2021 highs, there are pockets of value here in case you know where to look. Many weaker players have passed by the wayside, while the stronger firms have matured and change into more profitable. I like Turning Point Brands, Aurora Cannabis, and Jazz Pharmaceuticals as three attractive ways to play the market — all three are quite different, but what they’ve in common is that they’re all profitable, and so they all trade for cheap valuations. Moreover, analysts project a big potential upside of over 40% or more for all three over the following 12 months, highlighting their strong potential.
