If you think the stock market has been on a wild ride over the past five months, take a gander at what marijuana stock investors have gone through over the past three years.

Up until April 2019, investors could practically throw a dart at a list of publicly traded pot stocks and make money. Promises of capacity expansion and overseas dealmaking often proved more than enough to send valuations higher. In some instances, popular cannabis stocks delivered quadruple-digit percentage returns in less than two years.

But this all fell apart about 15 months ago. Regulatory-based supply issues in Canada, exorbitant tax rates on legal pot products in the U.S., and financing concerns throughout North America, are all responsible for crushing pot stock valuations. It's been one gigantic roller-coaster ride, which, for the most part, has seen earnings estimates for cannabis stocks fall considerably from where they were even three months ago.

However, there are exceptions to the rule. The following three pot stocks have all seen their fiscal 2020 and fiscal 2021 consensus earnings forecast from Wall Street improve over the past three months.

A cannabis leaf laid atop a one hundred dollar bill, with Ben Franklin's eyes peering between the leaves.

Image source: Getty Images.

Aurora Cannabis

Surprise! The most popular pot stock with millennial investors, and arguably one of the worst-performing weed stocks over the past 15 months, Aurora Cannabis (NYSE:ACB), has seen its consensus loss estimates on Wall Street narrow for fiscal 2020 and fiscal 2021. Three months ago (on a split-adjusted basis), Wall Street was counting on Aurora losing $15.24 Canadian per share in 2020 and CA$1.44 in 2021. These loss estimates have now narrowed to CA$13.62 in 2020 and CA$1.03 in 2021.

One of the likeliest reasons we've witnessed a narrowing in Aurora's consensus loss estimate is the company's aggressive cost-cutting campaign. Recently, management announced that it would be closing five of the company's smaller production facilities. This comes after halting construction on two of the company's largest projects last year, as well as laying off 500 workers. Aurora also sold off its 1-million-square-foot Exeter greenhouse for well below what MedReleaf had paid for it in 2018.

Another factor to consider is that Canadian marijuana sales picked up considerably in March and April. With the monthly high-water mark having previously been January 2020 (CA$154.1 million), Statistics Canada reported CA$181.2 million and CA$180.2 million in respective cannabis store sales in March and April. With more dispensaries finally opening up in key markets like Ontario, larger producers like Aurora Cannabis may finally be able to resolve some of the supply bottlenecks they've been dealing with. 

Also, don't overlook the fact that Aurora Cannabis has been issuing stock to raise capital, which continues to balloon its outstanding share count and dilute longtime shareholders. With more shares outstanding, a consistent projected operating loss would result in a narrower net loss per share.

While it's good to see Aurora Cannabis beginning to address some of its shortcomings, this isn't a stock I'd suggest investors entrust with their hard-earned money.

A cannabis leaf laid within the outline of the Canadian flag's maple leaf.

Image source: Getty Images.

HEXO

Surprise, again! Despite being one of the worst-performing marijuana stocks over since April 2019, Quebec-based licensed producer HEXO (NYSE:HEXO) has seen both its fiscal 2020 and fiscal 2021 consensus loss estimates narrow on Wall Street. Three months ago, analysts were expecting a loss of CA$1.29 per share in fiscal 2020 and CA$0.12 per share in 2021. As of today, these per-share loss estimates have been reduced to CA$1.12 and CA$0.08, respectively.

Similar to Aurora Cannabis, some very stringent expense reductions are paving the way to narrower losses. HEXO halted production at its Niagara facility, acquired via the Newstrike Brands acquisition in 2019, and subsequently sold Niagara for a meager CA$10.25 million. Additionally, HEXO has announced layoffs designed to reduce its capital outlays in an effort to backpedal toward profitability. 

Being based in Canada, the aforementioned record monthly sales figures in March and April offer hope that some of the early stage supply issues will begin to give way to robust demand. What remains to be seen for producers like HEXO is whether the initial coronavirus disease 2019 (COVID-19) shutdowns that encouraged consumers to load up on cannabis products was a two-month event or something truly sustainable.

Not to sound like a broken record, but HEXO has also been utilizing at-the-market offerings to issue its own stock to raise money, much in the same way as Aurora Cannabis. This means HEXO's outstanding share count has been steadily rising. As a result, it's quite possible that the company's narrowing loss could simply be a reflection of its ballooning share count, rather than meaningful progress with its operating efficiency.

No matter the reason for the company's narrowed consensus loss estimate, investors would be wise to avoid HEXO, which may soon face delisting from the New York Stock Exchange.

Multiple jars of unique cannabis strains on a dispensary countertop.

Image source: Getty Images.

Green Thumb Industries

The third pot stock whose earnings estimates are rising is U.S. multistate operator Green Thumb Industries (OTC:GTBI.F). Unlike Aurora Cannabis and HEXO, Green Thumb is expected to be profitable in 2020 and 2021. According to Wall Street's consensus, the company's 2020 forecast has improved from breakeven to $0.04 per share, with its 2021 per-share consensus profit up to $0.30 from $0.26 three months prior.

One big thing going right for Green Thumb Industries is that approximately two-thirds of the company's revenue is coming from high-margin derivatives, such as edibles, vapes, and topicals. While most folks associate marijuana sales with dried cannabis flower, it's these alternative consumption options that deliver the juiciest margins for licensed producers.

Green Thumb has also done a bang-up job of targeting its retail presence in key states. The company has been opening up a number of locations in Illinois, which became the first state to legalize the consumption and sale of adult-use cannabis entirely through the legislative process. Sales for recreational weed commenced on Jan. 1, 2020. Green Thumb also has a burgeoning presence in Nevada, where tourism is expected to drive big-time sales growth.

Lastly, the market potential for cannabis is simply much larger in the U.S. than it is in Canada. With elections and organic growth serving as an opportunity, Green Thumb Industries looks well on its way to becoming a winner in the cannabis space.