7 Pot Stocks with Major Upside | New Analyst Ratings and Price Targets

Despite the Current ‘Vape Crisis’ Sell-Off, Leading Analysts Expect These 7 Cannabis Stocks to Outperform Moving Forward

The 2019 fall season was begged by many including myself to be the time when marijuana stocks officially reversed the downswing. September started as expected with stocks lifting off the bottom and short-sellers beginning to cover their short positions. Before the rebound could gather enough steam, the cannabis industry was hit by a media storm as a result of vaping related illnesses including several deaths in the United States. Even though it has been proven that the vaping related health issues were caused by tainted cannabis vapes manufactured in the illegal black market, the media still blew the story up and even caught the attention of President Trump.

Many of the major media outlets omit the fact that the vapes in question were purchased illegally from black market sources causing widespread panic and calls for a vaping ban. Instead of the focus being on cannabis legalization and the eradication of the black market as the solution, we are seeing the entire industry being thrust into the spotlight.

The ‘vaping health crisis’ combined with weaker than expected earnings and regulatory scandals such as the CannTrust (TSX: TRST) (NYSE: CTST) Health Canada debacle have all painted the cannabis industry in a negative light. Share prices of cannabis stocks across the board have suffered as a result leaving investors questioning the future of the sector.

The majority of experts believe earnings will begin to improve as new markets in the United States open up and new products come online in Canada as a result of Legalization 2.0. Health Canada is making an example of CannTrust to make sure something like this does not happen ever again. The vape crisis is nothing more than a media scare that will likely blow over in due time as the truth prevails and the market realizes there is nothing wrong with the vape products being produced by reputable legal companies. Vaping has been around for a long time, so for all of these issues to suddenly pop up at once should sound the alarm bells and indicate there is likely more to the story than we’re being told. An article released yesterday by the National Review did a great job ‘Setting the Record Straight’ on vaping.

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Raymond James analyst Rahul Sarugaser believes the U.S. vape crisis will not bring down the cannabis sector as the blame for vaping related health issues can’t be tied to legally sourced cannabis products.

“While the CDC has yet to identify the specific cause of these vaping-associated illnesses and deaths, the US Food and Drug Administration (FDA), as part of its ongoing investigation, found that ‘most of those [vape cartridge] samples with THC tested also contained significant amounts of vitamin E acetate,’ a compound that is widely reported as a material used by illicit vape formulators to dilute — or ‘cut’ — cannabis extract products, thereby stretching supply of these relatively expensive cannabis-derived inputs,” stated Rahul Sarugaser.

“And so, while we reiterate that neither the CDC nor the FDA yet concluded that a single substance is at the root of this outbreak, it is our prediction that unregulated vape products modified with vitamin E acetate are among the primary culprits,” said Sarugaser.

Sarugaser has faith that Health Canada will take a fact-based approach in its review of the vaping issue and won’t succumb to political pressure from anti vape groups as the United States has.

“Our experience in biotechnology and our time spent understanding the workings of the US FDA and Health Canada, in particular, leads us to postulate that Health Canada will be primarily motivated to action by solid data and causation-supporting evidence rather than political pressure. Furthermore, in contemplating state/provincial/federal action, an important factor must be considered: banning legal e-cigarettes would only serve to push users toward the illicit market, further aggravating the present health crisis,” said the analyst.

The Raymond James analyst believes the cannabis market sell-off caused by the vape scare will be short-lived and expects the market to rebound as investors come to this same conclusion.

“We expect companies that have seen their stock prices decline more than the market average on account of the US crisis are likely to bounce back,” added Sarugaser.

Despite all the negative press circulating throughout the space, it’s still business as usual for the top cannabis companies. The industry is evolving and growing by leaps and bounds regardless of the unwanted media attention. Smart investors and analysts can see through the smokescreen and focus on the many undervalued investment opportunities created as a result of the bad press.

Below is a list of 7 cannabis stocks that the industry’s top analysts believe offer investors substantial upside. Let’s take a look at these companies and the recent analyst ratings, price targets and implied upside from today’s closing share prices.

Canadian Licensed Producers

Supreme Cannabis (TSX: FIRE) (OTCQX: SPRWF)