These 3 Marijuana Stocks Are The Most Enticing on Wall Street!

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These 3 Marijuana Stocks Are The Most Enticing on Wall Street!

Cannabis, also known as marijuana, remains illegal on a federal level in the United States. The result is a decrease in both company growth and investor enthusiasm for the cannabis industry. The experts on Wall Street are still confident in the long-term viability of many cannabis-related businesses, though. We’ll talk about three cannabis stocks in particular.

Investors’ enthusiasm for cannabis or marijuana companies has been dampened by the United States government’s protracted process of legalizing the drug at the federal level. Despite this, a growing number of jurisdictions are passing laws to regulate and tax cannabis.

Now, cannabis use for medical purposes is sanctioned by 39 states and the District of Columbia, while its use for recreational purposes has been given the green light by 21 states and the District of Columbia. Yet, Wall Street remains optimistic about the following cannabis stocks despite the slow pace of government legislation.

Curaleaf (CURLF)

One of the most successful multi-state operators in the United States, Curaleaf (CURLF) operates in 19 states and has 148 dispensaries. In 2021, the firm bought EMMAC Life Sciences to expand into the European market. In the third quarter of 2022, Curaleaf had an increase in both sales (up 7% to $340m) and adjusted EBITDA (up 18% to $84m).

Yet, the firm remained unprofitable according to GAAP. In an effort to consolidate its operations and cut costs, Curaleaf recently announced that it would be closing most of its locations in California, Colorado, and Oregon. The company’s decision to leave these areas was based on several factors, including falling prices and a lack of regulation of the black market.

Is Curaleaf a Good Stock To Buy?

A research analyst at Haywood Securities, Neal Gilmer, commented that the closures were “accretive to margins and profitability are given the challenging operating climate in these areas.” He also thinks that other cost-cutting measures, in addition to these closures, will lead to “substantial cash creation during 2023 and enhance Curaleaf’s balance sheet.”

Gilmer has maintained his Buy recommendation and C$9.25 price goal. With six out of six Buy ratings for Curaleaf, the financial markets are very positive for the company. Stocks with a median target price of $7.66, like CURLF, are expected to gain 96.4% in value. The stock price has dropped by 55% in the past 52 weeks.

Innovative Industrial Properties (IIPR)

One other way to obtain exposure to the cannabis sector is through Innovative Industrial Properties (NYSE: IIPR). It is a REIT or real estate investment trust, and it leases out commercial spaces to businesses authorized by individual states to cultivate, process, and distribute cannabis for medical and recreational use. There were 110 properties in 19 different states that were part of the company’s portfolio as of December 31, 2022.

It has a high dividend yield, at over 8%. It was disclosed last month that three tenants, SH Parent (Parallel), Green Peak (Skymint), and Medical Investment Holdings (Vertical), were in default on some rent payments, which caused IIPR shares to drop significantly. At the time of the release, the company had received 92% of its January 2023 rents (January 18).

Is Innovative Industrial Properties a Buy or Hold?

After last month’s operational update, Thomas Catherwood of BTIG decreased his price objective for Innovative Industrial Properties from $196 to $179 while maintaining a Buy rating. Catherwood remarked that, while management has already demonstrated its capability to settle tenant defaults (as in the case of Kings Garden) and re-lease vacated properties.

“An eviction of Green Peak and Parallel would be the company’s toughest test to yet.” “little-to-no impairment of asset value,” as the analyst puts it, “should further support the company’s strategy and ability to execute in a challenging environment.”

From the four ratings given to IIPR by Wall Street analysts, the consensus Strong Buy rating comes from three Buys and one Hold. The median price forecast for IIPR shares is $149.67, which indicates a potential upside of 72.5%. Over the past 12 months, share prices have dropped by around 54%.

Jazz Pharmaceuticals (JAZZ)

Jazz Pharmaceuticals (NASDAQ: JAZZ), a biopharmaceutical firm, creates treatments for neurological disorders and cancer. Jazz was able to obtain access to Epidiolex (contains cannabidiol or CBD), the first drug produced from marijuana to receive U.S. approval, through its 2021 acquisition of GW Pharmaceuticals.

Epidyolex, the European brand name, has also received approval. CBD-based and non-CBD medications are both in development by Jazz Pharmaceuticals. By the conclusion of the current decade, the company hopes to have delivered at least five new product approvals.

Is Jazz Pharmaceuticals a Buy, Sell, or Hold?

Needham analyst Ami Fadia reaffirmed a Buy rating and $208 price target on Jazz Pharmaceuticals after the company hosted an analyst event last month. Jazz is “strongly positioned to execute through 2023, the year it will finally confront generic competition on Xyrem,”. According to Fadia, the company should be able to meet its Vision 2025 goals.

The seven analysts polled by Thomson Reuters all gave their Buy ratings to Jazz, giving it a Strong Buy consensus on Wall Street. With an average price target of $206.86 per share, JAZZ stock has the potential for a 40% return from present levels. Throughout the past 52 weeks, the stock price has increased by about 5%.

Conclusion

Investor optimism about cannabis stocks has been hurt by the lack of reforms at the federal level. Wall Street is optimistic about Curaleaf, Innovative Industrial Properties, and Jazz Pharmaceuticals due to the industry’s huge development potential. However, it is important to keep in mind that the majority of cannabis stocks are very speculative and prone to sudden price swings.

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