Sifting through the Big List of Cannabis Stocks to Find a Winner

Cannabis stocks keep rising

The cannabis bulls are back in the market with cannabis stocks seeing meaningful gains every day. The Horizons Marijuana Life Sciences ETF (HMMJ), which consists of a diversified portfolio of cannabis stocks, including its top two holdings Canopy Growth (WEED) (CGC) and Aurora Cannabis (ACB) (ACBFF), has risen ~29% since August 14. With that said, it appears that the industry is regaining investor confidence.

Sifting through the Big List of Cannabis Stocks to Find a Winner

Too many options

After a slowdown, cannabis stocks rebounded last week from their YTD (year-to-date) lows. There’s no doubt that the marijuana industry has growth potential, but like any other industry, the challenge lies in picking the stocks that will likely achieve your growth objective.

Currently, investors have far too many options with all the cannabis stocks listed in the TSX (Toronto Stock Exchange) and a few listed in the US exchanges. In the above chart, you can see 25 cannabis stocks by market capitalization. A high volatility in marijuana stocks has left some investors bruised. Some companies have performed extremely well, while others are in the deep red.

Market capitalization

On one end, we have mid-cap stocks such as Canopy Growth with a market capitalization of $8 billion and Aurora Cannabis with a market capitalization of $5.9 billion. There are also a few small-cap stocks such as Aphria (APHQF) and Cronos (CRON) with market capitalizations under $2 billion. There are several micro-cap stocks, including Tilray (TLRY), with market capitalizations under $300 million.

In this series, we’ll provide one method to sift through the large list of cannabis stocks to find your winner.

Let’s start by seeing why the cannabis industry looks attractive.