5 Best Marijuana Stocks To Invest In

In this article, we discuss 5 best marijuana stocks to invest in. If you want to read our discussion on the cannabis market, head directly to 12 Best Marijuana Stocks To Invest In. 

5. Innovative Industrial Properties, Inc. (NYSE:IIPR)

Number of Hedge Fund Holders: 11

Innovative Industrial Properties, Inc. (NYSE:IIPR) is a self-advised Maryland REIT that concentrates on acquiring, owning, and managing specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities. Innovative Industrial Properties, Inc. (NYSE:IIPR) is one of the best marijuana stocks to buy. On December 15, 2023, the company declared a $1.82 per share quarterly dividend, a 1.1% increase from its prior dividend of $1.80. The dividend was distributed to shareholders on January 12. 

According to Insider Monkey’s fourth quarter database, 11 hedge funds were bullish on Innovative Industrial Properties, Inc. (NYSE:IIPR), compared to 16 funds in the prior quarter. Stuart J. Zimmer’s Zimmer Partners is the largest stakeholder of the company, with 950,628 shares worth $95.8 million. 

4. Tilray Brands, Inc. (NASDAQ:TLRY)

Number of Hedge Fund Holders: 13

Tilray Brands, Inc. (NASDAQ:TLRY) operates through four segments – Cannabis Business, Distribution Business, Beverage Alcohol Business, and Wellness Business. It offers medical and adult-use cannabis products, pharmaceutical and wellness products, beverage alcohol products, hemp-based food, and hemp wellness products. Tilray Brands, Inc. (NASDAQ:TLRY) is one of the best marijuana stocks to invest in. On February 22, Tilray introduced two new ready-to-drink cold brew tea beverages under its premium cannabis wellness brand, Solei.

According to Insider Monkey’s fourth quarter database, 13 hedge funds were long Tilray Brands, Inc. (NASDAQ:TLRY), compared to 17 funds in the prior quarter. Steve Cohen’s Point72 Asset Management is a prominent stakeholder of the company, with 2.3 million shares worth $5.4 million. 

3. The Scotts Miracle-Gro Company (NYSE:SMG)

Number of Hedge Fund Holders: 30

The Scotts Miracle-Gro Company (NYSE:SMG) manufactures and sells lawn, garden care, and indoor/hydroponic gardening products globally. It operates through three segments – U.S. Consumer, Hawthorne, and Other. The company offers a range of lawn care and gardening products, including fertilizers, seeds, plant foods, pest control, and hydroponic equipment. The Scotts Miracle-Gro Company (NYSE:SMG) is one of the best marijuana stocks to invest in. On January 22, the company declared a quarterly dividend of $0.66 per share, in line with previous. The dividend is payable on March 8, to shareholders on record as of February 23. 

According to Insider Monkey’s fourth quarter database, 30 hedge funds were bullish on The Scotts Miracle-Gro Company (NYSE:SMG), compared to 17 funds in the prior quarter. Schonfeld Strategic Advisors is the leading stakeholder of the company, with 444,336 shares worth $28.3 million. 

Madison Funds made the following comment about The Scotts Miracle-Gro Company (NYSE:SMG) in its Q4 2022 investor letter:

“Stock selection was the poorest for us in this sector. Two stocks in particular – Hain Celestial (HAIN) and The Scotts Miracle-Gro Company (NYSE:SMG) – while big winners for us in 2020 and 2021, hurt the portfolio in 2022.

While both companies were so-called COVID beneficiaries (businesses that benefited from consumers staying home and spending on their homes during COVID), we felt they possessed certain additional drivers that would maintain their fundamentals into 2022 and beyond.

Scott’s Miracle-Gro is arguably one of the great American franchises. The brand is synonymous with lawn care and pest control, has a dominant market share (~60%) with historically-impressive ~30% cash flow margins, and has the country’s largest Cannabis supply business. Scotts’ core business saw a significant windfall during COVID lockdowns. Lawn and garden care is not a growth business, and SMG dominance does not allow for much incremental gain in market share. However, our thesis was that even in a reopening scenario where lawn and garden businesses would revert to the mean, the cannabis market was poised for years of growth as more states legalized recreational use.

What we missed was the highly inefficient structure of the U.S. cannabis market. Currently, California, Colorado, and Michigan have the biggest and most mature markets. However, over the course of the last few years, several very large states and regions have voted to legalize recreational use, including New York, New Jersey, and Connecticut. The fly in the ointment has been Oklahoma, which is a medical marijuana state. Although recreational use is still prohibited, licenses to grow the crop were granted in Laissez Faire fashion to anyone willing to buy one. Oklahoma began to grow and cultivate the crop far in excess of their medical marijuana demand. That excess supply bled into gray markets across the country, devastating pricing for growers in other states. This glut put a near complete stop to capital spending on grow operations. With no new or incremental facilities coming on, Scotts’ Hawthorne business was cut in half from its peak in F21. This, of course, had a devastating effect on the stock.”

2. Bausch Health Companies Inc. (NYSE:BHC)

Number of Hedge Fund Holders: 31

Bausch Health Companies Inc. (NYSE:BHC) is a pharmaceutical company that develops, manufactures, and markets products in various medical fields, including gastroenterology, hepatology, neurology, dermatology, international pharmaceuticals, and eye health. Bausch Health Companies Inc. (NYSE:BHC) is also involved in the medical marijuana market. Bausch’s Q4 2023 revenue rose 9.5% year-over-year to $2.41 billion, beating Wall Street estimates by $120 million. 

According to Insider Monkey’s fourth quarter database, 31 hedge funds were bullish on Bausch Health Companies Inc. (NYSE:BHC), same as the prior quarter. GoldenTree Asset Management is the largest stakeholder of the company, with 27.6 million shares worth $221.7 million. 

Here is what Miller Value Partners Opportunity Trust Fund has to say about Bausch Health Companies Inc. (NYSE:BHC) in its Q2 2022 investor letter:

“Bausch Health Companies Inc. (NYSE:BHC) declined during the quarter as the company consummated its Bausch+Lomb IPO at valuations far below expectations, reported disappointing Q1 2022 results, and delayed its plan to spin out its Solta (aesthetics) business due to difficult market conditions. While the company spun off 10% of Bausch+Lomb (BCLO) they retained 90% of the company which they intend to distribute once they have met their target leverage ratio of 6.5-6.7x. The future spin-off value of the Bausch+Lomb piece represents a value of $12.55 per share, 39% above where Bausch Health is currently trading. The company recently appointed John Paulsen as Chair of the Board, which should accelerate value realization.”

1. Jazz Pharmaceuticals plc (NASDAQ:JAZZ)

Number of Hedge Fund Holders: 42

Jazz Pharmaceuticals plc (NASDAQ:JAZZ) is a biopharmaceutical company that focuses on identifying, developing, and commercializing pharmaceutical products to address medical needs in neuroscience and oncology. Jazz Pharmaceuticals plc (NASDAQ:JAZZ) is also involved in medical marijuana. On November 8, the company announced a Q3 non-GAAP EPS of $4.84, falling short of market estimates by $0.09. Revenue for the third quarter came in at $972.14 million, beating Wall Street consensus by $2.8 million. 

According to Insider Monkey’s fourth quarter database, 42 hedge funds were long Jazz Pharmaceuticals plc (NASDAQ:JAZZ), compared to 40 funds in the prior quarter. Bernard Horn’s Polaris Capital Management is the largest stakeholder of the company, with 1.26 million shares worth nearly $156 million. 

Aristotle Capital Global Equity Strategy made the following comment about Jazz Pharmaceuticals plc (NASDAQ:JAZZ) in its Q3 2023 investor letter:

“During the quarter, we sold our position in Magna International and invested in a new position, Jazz Pharmaceuticals plc (NASDAQ:JAZZ). Founded in 2003, Jazz Pharmaceuticals is a global biopharmaceutical company headquartered in Ireland. The drugmaker’s portfolio of nine approved products focuses on conditions with limited therapeutic treatments in neuroscience (~75% of 2022 revenue) and oncology (~25%).

Jazz’s drug Xyrem was added to its portfolio in 2005 and was approved for use in patients with narcolepsy. The drug’s strong efficacy propelled it to be the standard of care for this incurable sleep condition and has achieved wide adoption for the treatment of excessive daytime sleepiness and cataplexy (episodes of loss of muscle control)…

Xyrem’s patent exclusivity ended in January 2023, and authorized generic versions of the product have entered the market. To prepare for the patent cliff, the company developed Xywav, a lower‐sodium version of Xyrem, which is touted for its potentially better heart safety. The drug has received FDA approval for the treatment of narcolepsy and idiopathic hypersomnia and has orphan drug exclusivity through 2027…” (Click here to read the full text)

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out Goldman Sachs Penny Stocks: Top 12 Stock Picks and 10 Fastest Growing Energy Drink Stocks in the US.