The cannabis market as a whole has remained extremely profitable for some time now as new companies and innovations continue to enter the market. With so much business going on, one would think that most companies would be profitable in the space, but issues with legislation abound have meant that some companies have struggled to keep up with the fast-paced industry. That being said, several businesses have managed to remain in the top tier of profitability as the industry continues to head toward the future. Several stocks have come to the forefront of the industry over the course of the past few years,
The first company on the list that so many investors have been watching has been Scotts Miracle-Gro (NYSE:SMG) The company is in no way a traditional pure-play cannabis company but has still managed to penetrate the market by a long shot. The company recently purchased Sunlight Supply, which has helped them to break even further into the cannabis market. Scotts has had a trailing 12-month net income of around $200 million, which has made them the most profitable marijuana stock. One of the issues, however, is that Scotts has not been receiving all of this revenue from the marijuana industry, and has rather been making most of it from the hydroponics industry. In Q3 of this year, the company reported that around 7.5% of their income was coming from the Hawthorne sector of the company, but this market share has been steadily increasing as well.
The next company on the list is the company Aphria (NASDAQOTH:APHQF). Aphria has been stated to be one of the top five producers of cannabis over the course of the past several years, and continues to move into the top tier of the cannabis industry. One of the most interesting things of the company has been their 11 consecutive quarters of positive adjusted EBITDA. The profitability, however, has come from a one-time increase in investments, but nevertheless, the company remains incredibly profitable. In the short term, this has also been quite good, but the long-term could see a deficit due to the one-time profitability mentioned prior.
Next on the list is the company CannTrust Holdings (NASDAQOTH: CNTTF). Similar to Aphria, CannTrust is a licensed producer of cannabis in Canada, and the company recently reported a fifth consecutive quarter of profitability, adding to reasons why they have remained in the top tier of the industry. The company also has a trailing 12-month income of CA$18.5 million. The company according to one report has “gross profit exceeded its revenue in three of the last four quarters. That’s because the company benefited from unrealized gains on changes in the fair value of biological assets. In other words, the accounting value of CannTrust’s cannabis plants that haven’t been harvested yet increased.” CannTrust has been working alongside other companies to up their production by large amounts to meet the new and growing demand of the industry.
One of the largest pieces of news that has hit the market has been the advent of Canadian recreational cannabis. This is scheduled to become a reality as soon as October 17th, which means that many companies have been gearing up for this change for the coming months. The hopes are high that over the course of the next few months to years, these companies will remain at the forefront of the industry, adding profitability to the sector all in all.
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