Tilray Takes The Top Spot Of Marijuana Stocks

The New Stock On The Block Has Become A Marijuana Mogul

Tilray Corporate Headquarters

Tilray Corporate Headquarters

You’d be forgiven for not knowing the name Tilray Inc. The company was an unknown Canadian marijuana grower in Nanaimo, B.C. but a few short weeks ago. Humble beginnings aside, Tilray is becoming known as the king of the pot stock castle. The stock has spiked up in recent trading days, and those who got in weeks ago have seen a rare “ten-bagger,” in stock shop talk – meaning the stock has gone up ten times its original value since its IPO (initial public offering) in July. Canopy Growth Corp., long the world’s largest marijuana company, officially lost the title to Tilray, which can now boast roughly $15 billion (U.S.) in market value.

So what is behind this sea-change in the weed waters?

Tilray has shored up a choice few stock price catalysts that have scuttled the stock to the top recently. The company set a broad target with global medicinal marijuana, but more importantly drew the interest of investor Peter Thiel, the powerful billionaire, making it the belle of the ball among Wall Street traders, whose phones investors are clamoring for pot stocks.

According to Canaccord Genuity Analyst Matt Bromley, the company is perceived as having a very strong management team and is one of only three Canadian marijuana stocks listed on a U.S. exchange, where there is said to be a scarcity of weed companies listed due to lagging regulatory changes.

The frothy Canadian marijuana market comes as the nation is set to legalize recreational marijuana in October, and many early investors wonder if this will be a buy on rumour, sell on news situation, referring to concerns over whether the hype is warranted or has created a bubble about to burst.

Contrary to those who worry weed stocks are wafting to high, many point to tie-ins from beverage and pharmaceutical companies. A poorly kept secret on the street, beverage giant Coca-Cola Co. has been shopping for a partner to offer drinks infused with CBD, the non-psychotropic ingredient in marijuana that treats pain but doesn’t create hallucinations. Constellation Brands Inc., moreover, is now the largest shareholder of Canopy Growth. There is likely more deep-pocketed partnering to come, helping pot stocks stay aloft.

Tilray is attractive to these conglomerates due to the company’s international focus. The company grows and cultivates medical marijuana in Canada and Europe and has supplied products to patients in 10 countries via its subsidiaries in Australia, Canada and Germany and through agreements with pharmaceutical distributors, according to company documents. With medical cannabis now authorized at the national or federal level in nearly 30 countries, the legal market is in its early stages, and the number of countries where the drug is legal will continue to increase, according to Tilray’s latest quarterly earnings statement, making its reach truly global.

Written by Jason Bagg

Mr Bagg has over 20 years experience in financial services ranging from Capital Markets to Private Equity. Mr Bagg has helped clients build wealth, reduce taxes and plan for retirement. Drawing on his experience, Mr Bagg has spoken on different panels regarding investing and has written numerous due diligence reports and white papers in this area.

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