What happened
Marijuana stocks are having an unusually strong showing today. As of 11:28 a.m. ET Tuesday morning, Aurora Cannabis' (ACB +0.29%) stock is up by 16.3%, Green Thumb Industries (GTBIF +2.03%) shares are higher by 5.7%, and OrganiGram Holdings' (OGI 3.68%) equity is in the green by 8.5%.
What's powering this nearly industrywide rally today? Cannabis stocks are bolting higher this morning for two key reasons:
- Better-than-expected corporate earnings from industry giants like Coca-Cola, General Motors, and United Parcel Service are lifting stocks across the board today.
- Marijuana equities are also getting a boost today from the news that Canopy Growth (CGC +0.90%) has officially formed a U.S.-based holding company. This move is designed to accelerate the international cannabis giant's entry into the fast-growing U.S. market.
Image source: Getty Images.
So what
Cannabis stocks have been locked in a stubbornly persistent downward trend all year long. The negative investor sentiment toward growth-oriented industries like legalized marijuana, the unfavorable market dynamics in the Canadian cannabis market, and the slow crawl toward courtrywide legalization in the U.S. have all played a role in this broad downturn across the cannabis stock landscape in 2022.
NASDAQ: ACB
Key Data Points
Upbeat corporate earnings and Canopy's bold decision to move forward with its U.S. expansion plans could prove to be needle-moving events for cannabis investors in the coming months. The bear market in stocks at large is close to surpassing historical norms from a length standpoint, meaning that the formation of another bull market may be close at hand. Positive earnings from industry titans like Coca-Cola, General Motors, and United Parcel Service ought to serve as a stark reminder for investors that bear markets and economic downturns don't last forever.
Regarding Canopy's southward migration, this move is likely a harbinger of things to come for the industry as a whole. Aurora, after all, has long been eyeing the lucrative U.S. market, so it wouldn't be surprising if Aurora took a page from Canopy's playbook by forming its own U.S. holding company.
And in this next step in the industry's evolution, Green Thumb and OrganiGram are probably going to be red-hot takeover targets. Green Thumb would instantly ratchet up any Canadian company's U.S. footprint by virtue of its expansive commercial reach stateside. And OrganiGram's craft cultivator status may prove attractive to a number of Canadian companies looking to add a lineup of premium brands to their product portfolios.
Now what
Are any of these marijuana stocks worth buying right now? Green Thumb and OrganiGram are both fundamentally strong companies with a bright outlook. This means aggressive investors may want to consider buying these two beaten-down equities as the industry moves into the next phase of its life cycle. Aurora, on the other hand, still has work to do to secure its future as a king of cannabis.
