Investors have never been more excited about marijuana stocks, and the returns that early movers into the cannabis space have produced have been nothing short of sensational. Yet as with any other industry, not all pot stocks are created equal, and smart investors are trying to separate out the best prospects from the also-rans to make the most of their marijuana opportunity.

For a long time, Wall Street analysts didn't even cover cannabis companies, figuring that the industry would just be another passing fad among investors. Yet that's changed, and many companies with some of the most renowned analysts in the business have weighed in on the potential for certain marijuana stocks to outperform their peers. Below, you'll see which stocks analysts see rising the most from their current levels, along with some explanations for why Wall Street is so positive about their prospects.

A hand holding a cannabis leaf in front of rows of cannabis plants.

Image source: Getty Images.

Wall Street sees big gains from these three stocks

Without further ado, here are the three stocks for which analysts have the highest hopes:

Stock

Average Price Target

Implied Gain/Loss From Current Share Price

Aphria (NYSE:APHA)

$15.98

70%

Canopy Growth (NYSE:CGC)

$72.97

66%

HEXO

$10.21

66%

Data source: Marketwatch.com.

Aphria is only now starting to become a household name among cannabis investors, because the company is one of the more recent to list its shares on the New York Stock Exchange. However, Aphria deserves first-tier status with a projected production capacity that rivals the biggest players in the business, coming in behind only Canopy Growth and Aurora Cannabis. With supply contracts for all 10 of Canada's provinces as well as Yukon and an arrangement with an alcohol distributor with ties across the Canada market, Aphria is setting itself up well for future growth. Some of Aphria's upside potential comes from its relatively small size, which would allow a prospective acquirer to take a meaningful stake in the cannabis company at a reasonable price. Despite some hiccups in its internal operations, Aphria is taking strides toward a larger leadership role in the marijuana industry, and analysts expect that to pan out in the long run.

Meanwhile, Canopy Growth is the giant of the industry, having posted tremendous sales gains in its most recent quarterly report. Its collaboration with Corona and Modelo beer producer Constellation Brands has given Canopy access to vast financial resources and a distribution infrastructure that should dramatically accelerate its long-term growth plans. The fact that Constellation holds a large minority stake in Canopy and has warrants to increase that stake over time have led some to believe that the beer and spirits giant might simply purchase the marijuana company outright, possibly leading to a nice acquisition premium. Yet it seems more likely that Canopy Growth co-CEO Bruce Linton and his team will keep plowing forward to bulk up its production facilities, and efforts like its announced hemp production plant in upstate New York could be just the entryway to the U.S. market that Canopy has been waiting for.

Last but not least, HEXO is one of the newest entrants on a major U.S. stock exchange, and it's been working hard to expand at breakneck pace. The Quebecois cannabis company just spent almost $200 million to purchase Newstrike Brands in an effort to accelerate its production capacity growth, pushing HEXO into the top half-dozen anticipated pot producers. Yet not everyone's sold on HEXO, with analysts at Jefferies giving the company a sell rating and anticipating share-price declines in the near future. One big question is whether cannabis-infused beverages will take off as a marijuana-related market in its own right, because HEXO has a deal with Molson Coors that could be extremely lucrative if it's as successful as many believe. More bullish analysts have high hopes for that collaboration as well as for HEXO's ability to compete in the broader cannabis market in Canada and elsewhere.

Check out the latest earnings call transcripts for Canopy Growth and other companies we cover.

Will these stocks live up to the hype?

Analyst calls show how optimistic many investors are about cannabis stocks, but it's far from a sure thing that these three companies will post the share-price gains that analysts' price targets are predicting. To do so, HEXO, Canopy, and Aphria will all have to make good on their strategic visions while holding weaker competitors at bay. It'll take time to see whether the three cannabis companies are successful in their execution toward that goal.