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3 Top U.S. Marijuana Stocks of 2018 -- Are They Buys?

By Keith Speights – Dec 23, 2018 at 9:02AM

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These U.S. stocks have skyrocketed this year. But can the good times keep rolling into 2019?

Canadian marijuana stocks received the most attention from investors in 2018, with several of the biggest players listing on the New York Stock Exchange and the Nasdaq. But U.S. marijuana stocks quietly racked up some huge gains during the year.

The three biggest winners among U.S. marijuana stocks in 2018 are CV Sciences (CVSI 11.95%), MariMed (MRMD -1.20%), and New Age Beverages (NBEV -80.00%). Here's why these three stocks soared -- and if they're smart picks to buy for 2019. 

Rustic U.S. flag framed by marijuana leaves

Image source: Getty Images.

1. CV Sciences

Technically speaking, CV Sciences is a cannabis stock but not really a marijuana stock. The company focuses on developing hemp-based cannabidiol (CBD) products. Hemp, like marijuana, comes from the cannabis plant but contains very low levels of psychoactive compound THC.

CV Sciences enjoyed a banner year in 2018. Its stock skyrocketed more than 580%. The company generated record-high revenue in the first half of 2018 as well as in the third quarter. Its bottom line was equally impressive, with CV Sciences posting earnings of nearly $3.3 million in Q3 and $7.1 million in the first nine months of the year.

Earlier in December, CV Sciences won Nutritional Outlook magazine's 2018 Best of the Industry Award in the retail/brand product category for its top-selling PlusCBD Oil hemp-based CBD product. The company also launched a new line of PlusCBD Oil Gummies and increased the number of stores carrying its products to 2,093. 

2. MariMed

Halfway through 2018, MariMed already ranked as the top-performing marijuana stock of all. Its winning ways continued in the second half of the year despite a marked decline over the last couple of months. MariMed is set to finish 2018 up more than 300%.

The company's revenue soared in 2018, with $8.4 million made in the first nine months of the year -- an 88% year-over-year jump. MariMed's operations now span six states that have legalized medical marijuana, with two of them also legalizing recreational marijuana.

MariMed first made its name by providing advisory services to businesses operating in the U.S. cannabis industry. But the company eventually decided that it would rather run businesses than only serve as consultants to them. As a result, MariMed began acquiring its customers. The company has also made other deals, notably including a strategic investment in hemp-based CBD company GenCanna.

3. New Age Beverages

Going into 2018, New Age Beverages couldn't be categorized as a marijuana stock at all. But when the company announced in September that it planned to launch a new line of CBD-infused beverages, New Age Beverages stock took off. Despite some subsequent volatility, its share price is up more than 140% this year.

New Age Beverages also reported more news that excited investors. On Dec. 3, the company announced that it was acquiring Morinda Holdings for $85 million. The combination of the two entities will create the 40th largest non-alcoholic beverage company in the world with projected sales of $300 million. 

While New Age Beverages stock soared impressively this year, its market cap actually nearly increased by six-fold. The company's share price gains didn't keep pace with its market cap gains because New Age Beverages issued 12.9 million new shares in November in an offering that netted the company around $49 million.

Are they buys?

All three of these stocks could be winners in the U.S. hemp-based CBD market. And that market could be huge. Cannabis market research company Brightfield Group projects that hemp-based CBD product sales in the U.S. could total $22 billion by 2022.

The big risk that CV Sciences, MariMed, and New Age Beverages face, though, is that larger companies with deep pockets could also enter the market. This risk isn't just conjecture. Top Canadian marijuana producer Canopy Growth has already signaled its plans to jump into the hemp-based CBD market in the U.S.

It's possible that CV Sciences, MariMed, and New Age Beverages will hold their own against bigger competition. Perhaps one or more of these companies could be acquired by a larger player. But there appear to be too many variables at play to make any of these three stocks attractive right now to all but the most aggressive investors.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

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