Cannabis-focused biotechs and Canadian marijuana producers ranked as the top performers among marijuana stocks in February. But it was a much different story in March. This month, U.S.-focused companies took center stage.
The three best marijuana stocks in March were Charlotte's Web Holdings (NASDAQOTH: CWBHF), Origin House (NASDAQOTH: ORHOF), and CV Sciences (NASDAQOTH: CVSI). Here's why these stocks generated sizzling gains and whether or not any of the stocks are smart picks to buy now.
Continue Reading Below
1. Charlotte's Web Holdings
Charlotte's Web Holdings stock soared nearly 37% in March. Investors' enthusiasm appeared to increase heading into Charlotte's Web's Q4 update on March 28, with shares rising throughout the month.
There was ample reason for investors to be enthusiastic. Charlotte's Web is one of only a handful of pure-play marijuana stocks that are profitable. The legalization of hemp in the U.S. thanks to the passage of the Farm Bill in December has opened up a new world of opportunities for the company, which is the market leader in hemp-based cannabidiol (CBD) wellness products.
So how did Charlotte's Web perform in Q4? The company posted sales of $21.5 million, a solid 21% increase from the prior quarter and 71% year-over-year jump. It also continued its streak of profitability with earnings of $3.2 million, or $0.02 per diluted share. However, Charlotte's Web missed analysts' revenue and earnings estimates, and as a result the stock slipped a little at the end of March.
2. Origin House
I picked Origin House as my top marijuana stock to buy in March, and that choice turned out to be a good one. The stock jumped 35% during the month.
Origin House has made its mark as the leading distributor of cannabis products in California. Along the way, the company has also launched several of its own brands. Origin House also continues to be involved in its original mission of providing financing to cannabis businesses through its Trichome subsidiary. The company had news on all three fronts in March.
On March 12, Origin House introduced a new name for its California distribution platform -- Continuum. Later in the month, Continuum announced several new distribution agreements with cannabis growers. On March 22, Origin House announced that two of its subsidiaries that sell in-house brands FloraCal and Kaya transition from temporary operating licenses to annual licenses. And on March 18, the company's Trichome subsidiary announced a new financing deal with Ontario cannabis retailer Ganjika House.
3. CV Sciences
Shares of CV Sciences vaulted 25% higher in March. Like Charlotte's Web, CV Sciences is a leading supplier of hemp-based CBD products.
CV Sciences' solid gains this month follow fantastic returns in 2018, when it ranked as the best-performing marijuana stock of the year. The big catalyst for CV Sciences in March was the company's Q4 update on March 12. CV Sciences posted impressive improvement across the board.
The company's Q4 revenue increased by 96.4% year over year to $14.2 million. This growth was boosted by CV Sciences' hemp CBD products being sold in 2,238 stores across the U.S. at the end of 2018 compared to 1,548 stores as of the end of 2017. CV Sciences also reported a nice profit for full-year 2018 of $10 million after losing money in the previous year.
Are they buys now?
Charlotte's Web and CV Sciences should continue to reap the rewards from U.S. hemp legalization. More major retailers are putting hemp CBD products on their shelves, including big pharmacy chains CVS Health and Walgreens Boots Alliance. I expect sales for Charlotte's Web and CV Sciences will soar throughout 2019 and in the following years.
Origin House is sitting pretty in California, the largest legal marijuana market in the world. My view is that the California market dynamics will improve and boost Origin House's revenue. I'm also cautiously optimistic about the company's chances of success with its acquisition of leading Canadian vape retailer 180 Smoke.
If your investing style is conservative and you prefer to keep risk levels very low, you probably won't like any of these three stocks. However, I think that Charlotte's Web, Origin House, and CV Sciences appear to be pretty good picks for aggressive investors seeking to profit from the cannabis boom.
10 stocks we like better than Origin HouseWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Origin House wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of March 1, 2019