The Bellamy’s Australia Ltd (ASX: BAL) share price might be smoking the market today with a huge 26% jump higher, but its year-to-date gain has nothing on one group of shares.
Australia’s leading cannabis companies, or pot stocks, have produced some dazzling returns for investors since the turn of the year.
This is due largely to the Federal Government’s decision to loosen regulations and allow for the export of medicinal cannabis.
Investors appear to be betting big on the Government’s goal of making Australia the world’s number one exporter of medicinal cannabis.
Which isn’t a surprise considering the domestic market is predicted to be worth $1 billion and the global market $34 billion annually by 2021.
Here are a few of the best performers in the industry this year:
- The Auscann Group Holdings Ltd (ASX: AC8) share price is a staggering 120% higher year-to-date.
- The Cann Group Ltd (ASX: CAN) share price has climbed 28% in 2018.
- The Creso Pharma Ltd (ASX: CPH) share price is up 17% this year.
- The Hydroponics Company Ltd (ASX: THC) share price is 40% higher year-to-date.
- The MMJ Phytotech Ltd (ASX: MMJ) share price has risen 16% since the turn of the year.
Why is AusCann leading the way?
Investors appear to believe that AusCann is one of the best placed cannabis companies to profit from the change in regulations.
This is likely to be down to its partnership with Canadian pot stock Canopy Growth Corp. The CA$7 billion cannabis giant is a major shareholder and shares its expertise with AusCann on a royalty-free basis.
However, AusCann isn’t actually the largest pot stock on the local market. Cann Group is the largest with a market capitalisation of approximately $340 million.
Similar to AusCann, investors appear to be attracted to Cann Group due to its ties with CA$5.2 billion cannabis company Aurora Cannabis. Cann Group also has several production facilities in Australia with significant production capabilities.
Which should you invest in?
It is impossible to know which pot stock will ultimately reign supreme in Australia. Although, as we have seen in Canada, there is room for at least three giants. If this proves to be the case here in Australia, I would expect AusCann, Cann Group, and Creso Pharma to be the ones to excel.
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As of 2.11.2020
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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