In case you haven't heard, the marijuana industry is forecast to grow at one of the fastest paces of any industry in the world. A newly released report, "State of the Legal Cannabis Markets," from Arcview Market Research and BDS Analytics, forecasts a near-quadrupling in global licensed-store sales in the six-year period between 2018 and 2024, with some estimates on Wall Street calling for worldwide cannabis sales to climb to $75 billion by 2030. If these estimates prove even remotely accurate, there could be plenty of green to be made by pot stocks and investors.
The big question is: Which marijuana stocks are slated to see the most growth in the near term? While a single year doesn't make a cannabis stock a success, the following 10 pure-play pot stocks are currently projected by Wall Street to grow the fastest in 2020.
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1. Auxly Cannabis Group: 3,173% year-over-year (YOY) sales growth
Keeping in mind that it's starting from a small full-year sales base in 2019, marijuana royalty company Auxly Cannabis Group (CBWTF -0.83%) should be the fastest-growing cannabis stock next year, with sales rising to almost 186 million Canadian dollars. Having royalty deals in place with more than a dozen other growers, as well as wholly owned grow farms and joint-venture projects, Auxly has been patiently waiting for its partnered projects to come online. Next year, many of these licensed partners will finally be delivering product, which Auxly predominantly plans to utilize in derivative pot products, such as oils, edibles, topicals, and so on.
2. The Green Organic Dutchman: 517% YOY sales growth
Another late bloomer that's beginning from a relative low sales base is The Green Organic Dutchman (TGOD.F -23.08%), with sales expected to grow to almost CA$295 million in 2020. The Green Organic Dutchman projects as possibly the fourth- or fifth-largest grower by peak annual output (219,000 kilos), and it recently signed the largest extraction deal in history with Neptune Wellness Solutions, spanning three years and covering an aggregate of 230,000 kilos of hemp and cannabis biomass. Suffice it to say, Green Organic Dutchman is eagerly awaiting the start of derivative sales in Canada.
3. Flowr Corp.: 469% YOY sales growth
Niche marijuana grower Flowr Corp. (FLWPF) slots in third, with Wall Street looking for 469% year-on-year sales growth to CA$141 million. Unlike most growers, which are expected to flood the market with discount or average-quality cannabis, Flowr is using genetics to focus its efforts on ultra-premium marijuana, which should protect it from pricing pressures. Flowr also recently announced the acquisition of a massive outdoor grow farm in Portugal, giving it access to Europe's burgeoning but high-margin medical marijuana market.
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4. HEXO: 425% YOY sales growth
Growth should be exceptionally strong at Quebec-based HEXO (HEXO) in 2020, with sales forecast to rise to CA$317 million, up 425% from 2019, despite the company continuing to hold firm on its own projections of CA$400 million in sales next year. HEXO's big bump in revenue comes from the combination of its 1.3-mlllion-square-foot Gatineau campus ramping up, the addition of Newstrike Brands, which was recently acquired for just shy of $200 million (that's U.S. dollars), and the rollout of derivative products toward the end of this calendar year in Canada and cannabidiol (CBD) products in the U.S. in 2020.
5. Canopy Growth: 234% YOY sales growth
Not surprisingly, the largest pot stock in the world and the company slated to produce the second-most cannabis on an annual basis when at peak capacity, Canopy Growth (CGC 1.28%) looks poised to grow sales rapidly in fiscal 2020. Wall Street will be looking for CA$757 million in full-year sales as the company's more than 4.8 million square feet of licensed grow space is ramped up and Canopy pushes into the U.S. hemp market. The launch of derivative products later this year and the slow but steady resolution of supply issues in Canada should also lift Canopy's top line.
6. Aphria: 232% YOY sales growth
Despite internal struggles and scathing reports from short-sellers, Aphria (APHA) should have no trouble quickly growing revenue in 2020. The Street is currently looking for Aphria to generate CA$708 million in sales as its organically developed Aphria One facility, which is capable of 110,000 kilos of output per year, begins to ramp up. Maybe the bigger questions are whether Aphria will land a partner anytime soon and how long it might take for its joint-venture greenhouse retrofit project with Double Diamond Farms (known as Aphria Diamond) to get its cultivation license.
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7. Cronos Group: 223% YOY sales growth
Although Cronos Group's (CRON -1.66%) market cap isn't a laggard among its peers, its production certainly has been. Building from a smaller revenue base in 2019, Cronos should have little trouble more than tripling sales in 2020 to an estimated CA$130 million, per Wall Street's consensus. Since the company is known more for its cannabinoid development than for dried flower production, Cronos Group's investors will be looking for sales of its high-margin derivatives and commercially produced cannabinoids to pick up significantly next year.
8. MedMen Enterprises: 178% YOY sales growth
Among U.S. pot stocks, the fastest growing looks to be upscale dispensary operator MedMen Enterprises (MMNFF), with the consensus on Wall Street calling for nearly $450 million (MedMen reports in U.S. dollars). By 2020, MedMen should have completed its $682 million all-stock acquisition of PharmaCann, which'll add a number of new operational dispensaries and two dozen more retail licenses to its portfolio. MedMen is also set to open new retail locations in the medical marijuana-legal state of Florida, where it may soon have up to 30 stores.
9. Aurora Cannabis: 171% YOY sales growth
No surprise here, either: The largest cannabis producer in the world, Aurora Cannabis (ACB -1.15%), should be one of the 10 fastest-growing pot stocks next year. Estimates call for 171% sales growth to CA$717 million, with the ramp-up of Aurora Sky and a number of smaller facilities doing the work in the early part of the year. The key to Aurora Cannabis' rapid sales growth will be getting licensing approval for Aurora Sun, Aurora Nordic 2, and Exeter, its three largest facilities based on peak production, before the midpoint of 2020. Like Canopy Growth, Aurora is also eager to see Canada work through near-term supply issues in order to boost its sales.
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10. Cresco Labs: 161% YOY sales growth
U.S. multistate dispensary operator Cresco Labs (CRLBF -4.76%) rounds things out with expected sales growth of 161% in 2020 and forecasted sales of $725 million (again, U.S. dollars). Believe it or not, Cresco Labs is projected to lead all pure-play marijuana stocks in 2020 revenue. Aside from expanding the number of open dispensary locations across the country, Cresco should benefit from the pending acquisition of Origin House. Once complete, this deal will give Cresco access to more than 500 California dispensaries with its in-house-branded products, as well as Origin House's valuable cannabis distribution license in California.
Though revenue isn't everything, these 10 pot stocks are a good place to start your research if you're looking for budding growth in the cannabis industry.
