This Pot Stock, Is Going Higher

Some of the most popular searches right now are on cannabis stocks. 

We’ve seen them skyrocket in the last week, with the top two leading the surging stocks over the last few days.

Why?

Because earlier this week the House Panel announced it would consider a bill to decriminalize marijuana this upcoming Monday. 

Furthermore, the Senate unanimously passed a bill last Thursday to expand scientific and medical research on cannabis and encourage federal research into CBD.

Of course, all it takes is a shift in sentiment to get investors and traders to jump into cannabis related stocks. 

Many of them are down substantially from their all-time highs, but are now waking up after being largely dismissed for the last 8-12 months. 

The global cannabis market is estimated to be valued at $186B in 2020, and projected to reach $300B by 2030, a 28% CAGR.

While a favorable vote from the House should boost the entire sector. One stock, we believe, could smoke them all.

And it tops our search results amongst financial pros this month…

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Tilray Business

Tilray (TLRY) is at the forefront of cannabis research, cultivation, and distribution. The firm’s production platform supports over 20 brands in over 20 countries, including a suite of cannabis products, hemp-based foods, and alcoholic beverages. 

Tilray’s complete cannabis offerings include medical, premium plus, premium, core, and economy in the form of flower/pre-rolls, oils/capsules, vape, edibles, topicals, and more.

In May of 2021, Tilray merged with Aphria to create the world’s largest cannabis company by geographical footprint. 

Today, Tilray is one of the biggest suppliers of medical cannabis brands to patients, physicians, hospitals, pharmacies, researchers, and governments. 

Tilray Financials

Investors are willing to pay a premium for fast-growing companies. And TLRY fits the bill. The firm’s revenue growth improved by 27% from the previous year. The last three years have seen a CAGR of 136.6%

How does that stack up against some of its fiercest competitors?

Well, Canopy Growth Company (CGC), which has a slightly larger market cap than TLRY, its revenues only improved by 10%. And its 3-year CAGR is 53%, which is significantly smaller than Tilray’s 136.6%

TLRY Valuation

Relatively speaking, TLRY is cheap. 

The average price target across 21 analysts is $9.60. That made this stock incredibly cheap a week ago. Now, much less so.

Based on its 3-year price to sales ratio, the stock price should be trading north of $27.41. However, one could argue, TLRY’s price to sales ratio is higher than its competitors. And it’s the only true profitability measure we have since the company doesn’t generate profits or cash.

Our Opinion 7/10

Tilray (TLRY) remains one of the fast growing pot stocks in the market. Many investors have shied away from the pot business because of the federal laws. However, if pot was to get legalized on the federal level, you can imagine there will be an influx of new money and investments pouring into the sector. 

While plenty will scramble to take advantage of the opportunity. Companies like TLRY will be positioned to score big. And that’s why we like it here for the next 12-18 months. 

Keep in mind this is a speculative play. It requires a lot of things to go right. But if the stars align, this could be a major winner.