Pot Stocks: With Profitability on the Way, Is Cannabis Worth an Investment? - The Motley Fool Canada | Canada News Media
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Pot Stocks: With Profitability on the Way, Is Cannabis Worth an Investment? – The Motley Fool Canada

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Just a few years ago, pot stocks were some of the best growth stocks you could buy. These stocks rallied massively ahead of legalization, as many saw huge potential for the sector. That didn’t exactly pan out the way many expected it to, and the whole sector sold off rapidly.

Since the pot stocks sold off ahead of legalization, the sector has been for long-term investors only.

It was always going to take time for the industry to consolidate. Costs need to come down, and sales need to increase before investors start to see long-term growth potential. That may soon be the case, though, as many of the industry metrics continue to improve.

We have already seen many well-known pot stocks report increasingly attractive earnings in the last few years. And just a few weeks ago, when Canopy Growth (TSX:WEED)(NYSE:CGC) released its most recent earnings, management announced it expects to reach profitability in 2022.

That would be an incredible development, considering cannabis was only legalized in Canada fewer than five years ago.

And now that there are positive signs for the industry long term, you may wonder if the stocks are worth an investment today.

Are pot stocks worth an investment?

Ever since the crazy valuations in pot stocks came back down to earth, investors have been wondering when the industry may be investable.

While there was a tonne of hope and optimism about the legalization, that’s all it turned out to be. Significant growing pains have made the path to profitability long and grueling.

Pot stocks have always been great long-term investments, though. Since their valuations came back down, these companies have offered significant potential long term. The retail industry will only continue to grow, especially as more countries legalize cannabis.

However, much of the potential lies with new healthcare treatments that cannabis can be used for.

So, these companies, Canopy growth especially, continue to offer investors potential if you’re going to commit to the investment for the long term. But if you’re looking to buy pot stocks now for quick growth, you may be disappointed.

Stocks with more growth potential today

Rather than pot stocks, another industry offering incredible long-term growth but with more potential for growth in the short term is the psychedelics industry.

The psychedelics industry is a lot like the cannabis industry was before legalization. Unlike cannabis, there is no impending date that psychedelics may be legalized.

However, that isn’t what’s most exciting about the science of psychedelics. The sector is offering incredible potential in dealing with mental health such as PTSD and depression.

But because these stocks offer superior long-term potential and short-term growth with all the momentum lately, many investors may tend to favour these today over pot stocks.

The industry is so promising that many well-known investors like Kevin O’Leary and Peter Thiel are already investors in the sector. Even Bruce Linton, the founder and former CEO of Canopy Growth, is an early investor in the psychedelic sector. So, if these brilliant investors are in on the psychedelic sector, there must be a lot of potential.

If psychedelics seems like the type of investment you want to make, one of the top stocks in the sector is Numinus Wellness.

Bottom line

Both psychedelics and pot stocks offer investors quality long-term potential, making them great investments. The research and development continues to create new possibilities for both industries. So, if you’re willing to make a long-term commitment to these stocks today, they might be the best investments you ever make.


Fool contributor Daniel Da Costa has no position in any of the stocks mentioned.

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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