Recreational marijuana stocks have fallen over the last few months. But that makes them even better investments in a legal cannabis market projected to be worth $75.6 billion by 2025.
In fact, one of our best recreational marijuana stocks is up more than 200% within a year.
Over the past several years, legal recreational marijuana has grown from just a few states to 11. That includes even more densely populated states like Massachusetts and California.
It's spurred a $10.4 billion valuation for the industry today.
Since 33 states have legalized marijuana for medicinal purposes, that figure is expected to rise in the future.
The robust market will rise right along with it. Meticulous Research forecasts that the legal weed market worldwide will expand 28.3% every year between 2019 and 2025. In 2025, that would make the market worth $75.6 billion, versus $10.4 billion today.
Growth like this makes recreational weed stocks a great addition to your portfolio.
Of course, marijuana stocks have been volatile in the last year. But that's because this is a brand-new market flooding with competition. And many cannabis firms are not yet profitable. They're bound to see some growing pains.
Investing in pot stocks today is just a matter of picking the market's winners.
We use the proprietary Money Morning Stock VQScore™ system find the companies most likely to see big profits in the near term.
The VQScore analyzes the underlying financials of thousands of companies. It then gives each stock a rating between 1 and 4.9. The higher the rating is, the more likely the stock is about to break out.
A lot of recreational marijuana equities don't make it to even a 1.0 rating, frankly. They have yet to turn a profit.
But our best recreational marijuana stock today has a perfect score of 4.9. That means it's almost certain to lead the recreational cannabis industry.
Analysts expect it to shoot up 212% in price…
Cronos Group Inc. (NASDAQ: CRON) currently trades at a bargain. Its price has fallen more than 50% since its peak in winter 2018. You can pick it up for just $8 right now.
One reason for the drop is concern over products related to vaping and acute lung disease. The U.S. Centers for Disease Control and Prevention (CDC) and other agencies are investigating reports of illnesses related to vaping. Some states, such as New York, are discouraging the use of the products, as reports of these illnesses are rising.
But CRON and other legal marijuana companies had nothing to do with these reports.
It turns out, the vaping issues may have arisen from homemade and black market products – which exist due to the illegal status of marijuana in most states. Still, many cannabis companies took a hit from the market's knee-jerk reaction.
But CRON's share price drop was from perception and not reality. The market will soon realize this, and the stock will surge again.
It's not just a good share price. CRON has a strong strategy for growth. For one thing, it's avoiding diluting shares with a secondary offering. That shows it's keen to shareholder interests.
CRON management is also on its game. This year, it sold 45% of its firm to Altria Inc. (NYSE: MO) for $1.8 billion in cash.
CRON gets a significant strategic partner from this, as Altria is one of the biggest producers of tobacco cigarettes. And the cash will let CRON strategically acquire other firms and grow market share vis-à-vis competing companies.
Another major competitive advantage for Cronos is its product focus. Cronos targets not just weed, but cannabidiol (CBD). Competition will likely lower margins in the broader weed market. But specializing and perfecting a product separates winners from the pack.
So CRON wants to produce CBD, which is used in a wide range of products and enjoys a higher margin.
It's a profitable strategy. In the first two reporting periods of 2019, CRON made $323 million and $187 million in profits, respectively. In 2018, by contrast, it lost $14.6 million.
Not only that, but revenue rose 120% year over year in the past quarter. Wall Street analysts forecast revenue of more than $60 million this year – a whopping 283% yearly growth.
And again, its VQScore is perfect at 4.9. It's due for a price jump.
Once the breakout occurs, CRON is expected to rise to $25 per share by year-end 2020 – a 212% climb.
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