Like cannabis stocks Cronos Group (NASDAQ:CRON) see explosive highs this year. That makes CRON stocks and other marijuana a compelling investment to look into now.
In addition, many states – like Virginia – are already legalizing cannabis. For example, voters in New Jersey and Arizona voted to legalize the drug for adult recreational use, while states like Mississippi have voted to legalize it for medical use. Now there is speculation that we might see federal legalization in the near future.
So it’s no wonder cannabis stocks hit all-time highs. Here are some examples:
- Canopy growth (NASDAQ:CGC) just went from $ 25 to a high of over $ 56
- Hexo (NYSE:HEXO) ran from $ 4.50 to a high of around $ 11
- Aurora cannabis (NYSE:ACB) went from $ 8 to almost $ 19
- Curaleaf (OTCMKTS:CURLF) went from $ 12 to a high of over $ 18
- Aphria (NASDAQ:EXACTLY HERE) went from $ 12 to a high of over $ 32
Eventually, the Cronos Group exploded from around $ 7 in early 2021 to a high of $ 15.83. Of course, it has since pulled back down to the $ 11 level. However, I firmly believe that after the support it could revert to its previous high.
CRON Stock could be one of the hottest pot games in 2021
There are several reasons to like CRON stocks, but one noteworthy point is that the company’s chairman Mike Gorenstein expects it to have laboratory-grown cannabis in its products this year. In that case, this could be a first for the industry. This method of making products with cannabinoids derived from biosynthesis would be far cheaper.
According to Bloomberg employee David George-Cosh, biosynthesis is “a technical process similar to brewing beer that can bring THC and CBD for pennies on the dollar”.
We’ll get a fourth quarter profit from CRON in late February, but as a reference, the company did well in the third quarter. Cronos exceeded expectations and had a good amount of cash on hand too. The earnings per share (EPS) of 4 cents were above expectations for a loss of 6 cents. In addition, sales of nearly $ 11.4 million exceeded expectations. After all, the company had cash and cash equivalents of around $ 1.1 billion.
Investors should also remember this Altria (NYSE:MO) also supports Cronos.
At the end of 2018, Altria invested USD 1.8 billion in a 45% stake in CRON and a warrant that grants MO the “right to acquire an additional 10%” of CRON for USD 1 billion (page 28). With that we could see another cash injection in Cronos or maybe a takeover bid.
There is a lot of support for cannabis
Aside from CRON stock itself, there have also been new positive developments for cannabis. For example, recent research shows that there have been lower opioid death rates where cannabis is legal. Health Line describes the following:
“Researchers found that districts with more legal cannabis dispensaries had fewer opioid-related deaths […] Their analysis found that increasing the number of pharmacies in a county from one to two was linked to a 17 percent decrease in deaths from opioids. “
In addition, far more Americans support legalization. Megan Brenan, Contributor at Gallup, notes:
“Americans are more likely to support marijuana legalization today than at any time in the last five decades […] The 68% of adults in the US who currently support the measure are no statistically different from the 66% last year. However, it is nominally Gallup’s highest value and is above the 64% to 66% range from 2017 to 2019. “
Finally, the Senate Democrats – including Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman, Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) – are trying to enforce cannabis laws reform.
The bottom line
Overall, the CRON share is well positioned to benefit from it in the near future.
For one, there is a lot of public support for legalization. In addition, some congressmen are pushing for reforms this year, as are many other states. With all of this happening, cannabis stocks are making new highs. And should we see further legalization, the sky’s the limit.
In my opinion, Cronos is one of the best ways to trade this story. Not only is it oversold in support, it could transform the industry with its laboratory grown cannabis products. Also, there could be another cash injection from tobacco giant Altria in the near future.
In short, take a position in CRON stock and just let it go. It could see significantly higher heights.
At the time of publication, Ian Cooper held positions (neither directly nor indirectly) in the securities identified in this article.
InvestorPlace.com’s Ian Cooper has been analyzing stocks and options for web-based advice since 1999.