The marijuana business is expanding rapidly.

The U.S. Food and Drug Administration recently posted a new message on its website indicating it is taking an open-minded but scientific approach to researching the potential benefits and dangers associated with marijuana and cannabis-related products. Cannabis investors and enthusiasts are patiently awaiting potential U.S. legalization. Several popular cannabis stocks have been top performers in the market in the past year. The cannabis business is expanding rapidly and the potential total addressable market is massive. However, some analysts are starting to get concerned about sky-high valuations. Here are eight cannabis stocks that have Wall Street buzzing.

Next:Tilray (ticker: TLRY) Credit

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Tilray (ticker: TLRY)

Shares of Canadian cannabis producer Tilray are down 37% so far in 2019. Oppenheimer analyst Rupesh Parikh says Tilray is a leader in the global cannabis space and aims to target both the consumer and medical markets. Tilray has secured key partnerships with companies like Sandoz, Shoppers Drug Mart, Pharmasave Drugs and Anheuser Busch Inbev (BUD). Unfortunately, given challenges in supplying the Canadian market and Tilray’s valuation relative to its cannabis peers, Parikh says there’s little near-term upside for Tilray shares even after the sell-off. Oppenheimer has a “perform” rating for TLRY stock.

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The marijuana business is expanding rapidly.

The U.S. Food and Drug Administration recently posted a new message on its website indicating it is taking an open-minded but scientific approach to researching the potential benefits and dangers associated with marijuana and cannabis-related products. Cannabis investors and enthusiasts are patiently awaiting potential U.S. legalization. Several popular cannabis stocks have been top performers in the market in the past year. The cannabis business is expanding rapidly and the potential total addressable market is massive. However, some analysts are starting to get concerned about sky-high valuations. Here are eight cannabis stocks that have Wall Street buzzing.

Tilray (ticker: TLRY)

Shares of Canadian cannabis producer Tilray are down 37% so far in 2019. Oppenheimer analyst Rupesh Parikh says Tilray is a leader in the global cannabis space and aims to target both the consumer and medical markets. Tilray has secured key partnerships with companies like Sandoz, Shoppers Drug Mart, Pharmasave Drugs and Anheuser Busch Inbev (BUD). Unfortunately, given challenges in supplying the Canadian market and Tilray’s valuation relative to its cannabis peers, Parikh says there’s little near-term upside for Tilray shares even after the sell-off. Oppenheimer has a “perform” rating for TLRY stock.

Aurora Cannabis (ACB)

Aurora Cannabis is the second-largest Canadian cannabis producer. Stifel analyst W. Andrew Carter is forecasting rapid revenue growth from 168 million Canadian dollars ($128 million) in the past 12 months to CA$960 million in fiscal 2021. However, Carter says Aurora is at a disadvantage to other top Canadian producers in that it has not secured an international consumer or pharmaceutical company partnership. He also says Aurora may be focusing too much on margins and not enough on investing in business growth. Stifel has a “hold” rating and CA$10 price target for ACB stock.

Cronos Group (CRON)

Carter says Cronos has the major partnerships and solid capital position necessary to make a strong push into the global cannabis market. The partnership with tobacco giant Altria (MO) is particularly impressive and will help Cronos work through the logistics of expanding its business to 20 times the size of its first-quarter sales numbers by the end of 2021. However, with the stock already up 135% in the past year, Carter says Cronos is fully valued at today’s prices. Stifel has a “hold” rating and CA$18 price target for CRON stock.

GW Pharmaceuticals (GWPH)

GW Pharmaceuticals is a pharmaceutical company focused on developing cannabinoid drug treatments for various diseases. The company’s Epidiolex is the first drug approved by the FDA that contains a substance derived from marijuana. Bank of America analyst Tazeen Ahmad says first-quarter sales of Epidiolex were $33.5 million, more than double her prediction of $16 million. Epidiolex is approved for treatment of seizures associated with Dravet’s Syndrome, but GW has also gotten positive Phase III data on treating Tuberous Sclerosis Complex as well. Bank of America has a “buy” rating and $218 price target for GWPH stock.

Canopy Growth Corp. (CGC)

Canopy Growth Corp. has one specific advantage over its cannabis peer group that makes it a unique choice for investors. Not only is Canopy the largest cannabis producer in Canada today, Cowen analyst Vivien Azer says Canopy is the best-positioned Canadian producer to eventually enter the U.S. market. Canopy recently secured a conditional buyout of U.S. producer Acreage Holdings (ACRGF) that could give Canopy a major overnight presence in the U.S. market in the event of federal legalization. Cowen has an “outperform” rating and CA$82 price target for CGC stock.

Curaleaf (CURLF)

Curaleaf is arguably the largest U.S. multi-state operator, with plans to expand to nearly 70 dispensaries in more than a dozen U.S. states by the end of 2019. Seaport Global analyst Brett Hundley says the Massachusetts-based Curaleaf has a number of advantages, including its leading branded market share in the U.S. and a first-mover advantage in the critical state of Florida, where it already operates 20 retail locations. In addition, Hundley says Curaleaf’s management team has an impressive collective body of experience. Seaport Global has a “buy” rating and $10 price target for CURLF stock.

Aphria (APHA)

Canadian cannabis producer Aphria has lagged its peer group in recent months following short seller allegations that the company inflated the value of its assets and made transactions to benefit conflicted company insiders. However, Jefferies analyst Owen Bennett says the stock has been punished too hard given an investigation by a special committee found no evidence of asset value inflation. In addition, the company has cut ties with any companies and individuals that might be a conflict of interest for Aphria. Jefferies has a “buy” rating and CA$15 price target for APHA stock.

CannTrust Holdings (CTST)

CannTrust is a Canadian cannabis producer that just announced a joint venture with diversified California farming company Elk Grove. Bank of America analyst Christopher Carey says the new deal will provide CannTrust with access to more than 3,000 acres of land to produce low-cost hemp for cannabidiol extraction. Carey says the U.S. CBD market is an attractive opportunity for cannabis producers that has only been available since the passage of the Farm Bill in December 2018. Bank of America has a “buy” rating and CA$9 price target for CTST stock.

Marijuana stocks that Wall Street loves:

Tilray (TLRY)Aurora Cannabis (ACB)Cronos Group (CRON)GW Pharmaceuticals (GWPH)Canopy Growth Corp. (CGC)Curaleaf (CURLF)Aphria (APHA)CannTrust Holdings (CTST)1 of 11

Wayne Duggan, Contributor

Wayne Duggan has been a U.S. News & World Report contributor since 2016. He is an expert at ...  Read more

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