None of the California students who originally connected 420 with cannabis use had a clue what they were starting. Today, 420 day — April 20 — is celebrated by many cannabis proponents. And they have more to celebrate this year than ever. New York, New Mexico, and Virginia recently passed legislation to legalize recreational marijuana, bringing the total number of states where pot is or will soon be legal to 17.
There are also more opportunities for investors to profit from the booming U.S. cannabis industry than ever before. In keeping with the 420 theme, here are four marijuana stocks to buy on 420 day that could realistically soar 20% or more this year.
1. Ayr Wellness
Ayr Wellness (OTC:AYRW.F) started out focusing on the cannabis markets in Massachusetts and Nevada. The company’s scope is much bigger now. Thanks to acquisitions, Ayr now also operates in Arizona, Florida, Ohio, and Pennsylvania.
There will soon be another state added to the list. Ayr plans to acquire Garden State Dispensary in a deal that will give it three cannabis dispensaries in New Jersey. This transaction is expected to close in the third quarter of 2021.
With all of this gobbling up of smaller cannabis companies, Ayr will rank as a top-five multistate operator (MSO). It’s also arguably the biggest bargain among its peers with the lowest price-to-sales (P/S) ratio in the industry. With its revenue growth set to accelerate, I think that Ayr stock could easily jump another 20% this year.
2. Cresco Labs
Cresco Labs (OTC:CRLBF) also ranks as one of the most attractively priced U.S. pot stocks with a P/S multiple only a little higher than Ayr’s. Like Ayr, Cresco has grown tremendously through acquisitions.
The company is the largest cannabis wholesaler in the U.S. thanks to its early 2020 buyout of Origin House. It’s a top cannabis wholesaler in California, Illinois, and Pennsylvania. The company also operates retail cannabis stores in the latter two states plus Arizona, Massachusetts, New York, and Ohio.
All of these markets should give Cresco significant growth opportunities. Even better, Cresco’s recent acquisition of Bluma Wellness will make the company a contender in Florida’s booming medical cannabis market. New York’s legalization of recreational marijuana also opens up a huge new market for Cresco. The company already is one of only 10 cannabis operators currently licensed for vertical operations in the state.
3. Curaleaf Holdings
Speaking of New York, Curaleaf Holdings (OTC:CURLF) claims the No. 1 market share in the state’s medical cannabis market. The company should be able to leverage that position to become a big winner in New York’s recreational marijuana market as well.
Curaleaf stands as the largest MSO in the U.S. right now. And it’s not just the market leader in New York. The company also holds leading market shares in Connecticut, Maryland, Massachusetts, New Jersey, North Dakota, Pennsylvania, and Vermont. In addition, it has a No. 2 or No. 3 retail market share in Arizona, Florida, and Maine.
There’s no question that Curaleaf will be able to continue growing in the U.S. However, the company also now has a solid growth opportunity in Europe. Earlier this month, Curaleaf completed its acquisition of EMMAC, Europe’s largest vertically integrated independent cannabis company.
4. Jushi Holdings
Jushi Holdings (OTC:JUSHF) is the smallest of these four cannabis stocks with a market cap of less than $700 million. However, Jushi is growing sales faster than most of its rivals. Its stock has also outperformed all of the biggest MSOs over the last 12 months.
I think Jushi’s share price has plenty of room to run. In March, the company opened its 17th retail cannabis store nationwide. Eleven of those stores are in Pennsylvania. Like its peers, Jushi is also growing via acquisitions. It recently closed deals in Massachusetts and Nevada. Earlier this year, the company signed two agreements that expand its operations in California.
Jushi appears to be poised to potentially be the biggest winner from Virginia’s legalization of recreational marijuana. It already has a presence in the medical cannabis market in the fast-growing northern part of the state. Although Virginia’s recreational market isn’t scheduled to open until 2024, Jushi should have other growth drivers over the short term that could propel this stock 20% higher or more this year.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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