5 Best Cannabis Stocks to Buy in November 2021

Cannabis stocks have looked weak in 2021 as the legalization hopes have faded. However, the sector is an attractive investment theme with strong long-term growth prospects.

After the crash, some of the cannabis stocks have started to look attractive, provided you are willing to take a long-term view. Here are the five best cannabis stocks that you can buy in November 2021.

1. Tilray (NYSE: TLRY)

Tilray has become a cannabis powerhouse after its merger with Aphria. Last month, the company released its fiscal first-quarter 2022 earnings. It reported net revenues of $168 million in the quarter, a year-over-year rise of 43%. During the period, its net cannabis revenues increased 38% to $70 million while net beverage revenues were $15 million in the quarter following the SweetWater acquisition. It also reaped $15 million in revenues from the Manitoba Harvest acquisition.

TLRY reported an adjusted EBITDA of $12.7 million in the quarter, which was its tenth consecutive quarter of positive adjusted EBITDA. The metric would have been $17 million without accounting for Aphria. Notably, most of the cannabis companies are posting negative EBITDA and the consolidation in the industry is a welcome move as it would help in addressing the pricing pressure amid the oversupply situation.

Tilray is among the best cannabis stocks for the long term

Currently, Tilray’s annual revenue run rate is below $1 billion. However, by the fiscal year 2024, it is targeting revenues of $4 billion, through a mix of organic and organic growth. If you are looking to buy cannabis stock for the long term, Tilray looks among the best bets.

Tilray stock trades at an NTM (next-12 months) EV-to-revenue multiple of 7.3x which looks quite attractive.

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2. Aurora Cannabis (NYSE: ACB)

Aurora Cannabis stock has lost over 27% so far in 2021. The company would release the fiscal first quarter 2022 earnings next week. Analysts expect the company’s revenues to fall 4% YoY to $50.03 million in the quarter. The company’s revenues fell in the last two quarters as well and are expected to fall in the second quarter of fiscal 2022 also. However, post that, analysts expect a recovery in its revenues. However, the company is not expected to become profitable anytime soon and is expected to post losses for at least the next four quarters. The dismal profitability record has also been taking a toll on ACB stock.

ACB is a contrarian cannabis stock

Wall Street analysts are quite bearish on ACB stock. It has received eight hold and six sell ratings. Its median target price of $5.51 is a discount of 20.6% over current prices. Meanwhile, ACB expects to become adjusted EBITDA positive next year. Here the company’s projections should be taken with a pinch of salt a sit has missed previous deadlines as well.

All said ACB looks like a contrarian cannabis stock. While markets are quite bearish on the stock, if the management delivers on the profitability, it could lead to the upside in the stock.

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3. Innovative Industrial Properties (NYSE: IIPR)

Cannabis stocks are quite volatile and none of them pays a dividend. If you want exposure to the cannabis industry with relatively less volatility and also crave a dividend, IIPR would fit the bill. The company is structured as a REIT and leases land to cannabis companies for cultivation. While cannabis stocks have been weak in 2021, IIPR is up 46% in the year and is trading near its 52-week highs. Its dividend yield is 2.3% which also looks attractive.

IIPR is a relatively stable cannabis stock

Overall, IIPR is a relatively stable cannabis stock. The company released its third-quarter earnings yesterday. Its total revenues increased 57% to $53.9 million in the quarter. Its AFFO (adjusted funds from operations), which is a key metric for REITs, was $45 million in the quarter. The company has been growing its asset base and after 1 July, it has made five acquisitions which includes four new acquisitions and one expansion at an existing property.

The company posted AFFO per diluted share of $1.71 in the quarter which took its AFFO in the first nine months to $4.81. The increase in AFFO would help the company increase its dividend payout.

IIPR is a good cannabis stock to buy in November 2021 and bet on the continued growth in the cannabis industry. As cannabis companies lease more land for cultivation, it would mean more for business for IIPR.

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4. WM Technology (NYSE: MAPS)

WM Technology is another niche cannabis stock. The company runs the Weedmaps platform which is an online marketplace for marijuana. It also has WM Business under its fold which is a SaaS subscription offering for marijuana companies. While the company is not a pure-play cannabis stock, it nonetheless looks a good way to play the industry.

MAPS is a niche cannabis stock

MAPS is a niche cannabis stock. The company’s gross profit margins are in the 90s which is quite decent considering the terrible finances of many of the pure-play cannabis companies. The company’s sales have also increased at a CAGR of 35% between the fiscal year 2014 and 2020. The company expects to post revenues of $205 million and adjusted EBITDA of $50 million this year.

MAPS went public through a SPAC reverse merger and currently trades at a premium of over 20% to the SPAC IPO price of $10. The company has a market cap of around $1.6 billion. The valuations look decent considering its growing business and profitable operations. The stock trades at less than half of its 52-week highs and the post-merger dip looks like a good buying opportunity.

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5. Amplify Seymour Cannabis ETF (CNBS)

Cannabis stocks are usually quite volatile. If you want diversified exposure to the sector, you can do so by investing in a cannabis ETF. CNBS looks among the best ETFs to play the cannabis industry. It is an actively managed ETF and seeks to invest over 80% of its portfolio in companies that get more than half of their revenues from cannabis-related businesses.

CNBS gives you a diversified portfolio of cannabis stocks

The ETF is managed by Tim Seymour who is an experienced investor in the cannabis industry. The ETF has 47.4% exposure to Canada-based cannabis stocks while US-based cannabis stocks make up 48.5% of the portfolio. Tilray is currently the biggest holding for the ETF. The ETF has a total expense ratio of 0.96% annually which might appear on the higher side. However, if you are looking at a diversified exposure to the cannabis industry, CNBS looks like a good bet.

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