One of the most exciting, most rewarding stories for investors is still cannabis.
The momentum generated by corporate interest, H.R. 420 in Congress, and legalization has sent many related names significantly higher.
However, there are still plenty of opportunities to be found — especially in beverages.
Just look at the cannabis-beverage story.
Analysts at Canaccord Genuity believe the market could explode to $600 million by 2022. The firm also believes CBD beverages will become a $260 million market, as the THC beverage market quickly becomes a $340 million market.
Driving most of that momentum are beer companies — many of which are seeing beer sales fall.
“Hypothetically you take a consumer that on a beer occasion would have three or four beers and then add cannabis to the mix, well now that’s one or two beers plus cannabis,” Cowen analysts noted. “As we think ahead to 2019, we are increasingly cautious again on beer. I would expect all of the large global alcohol players are paying attention to this.”
So, it’s no surprise to see such companies jumping on the cannabis bandwagon.
Anheuser-Busch, for example announced a $100 million deal with Canadian medical marijuana company, Tilray Inc. to research drinks infused with cannabis. New Age Beverages Corporation just announced an agreement to develop and distribute Bob Marley-branded CBD-infused beverages. The Coca-Cola Co. said may enter the CBD market, too. Canopy Growth (CGC) attracted interest from Constellation Brands, as well.
In fact, Constellation increased its stake in Canopy Growth by $4 billion. Constellation’s investment in Canopy — the biggest known deal in the marijuana industry — shows just how far traditional alcoholic beverage companies are willing to go to find growth.
“We believe the emerging cannabis space represents one of the most significant global growth opportunities of the next decade, and frankly, our life time,” said CEO Bill Newlands. “An opportunity that is opening up much more rapidly than originally anticipated.”
One stock that’s just beginning to gain momentum from the story is HEXO Corporation.
HEXO Corp., through its subsidiary, HEXO Operations Inc., produces, markets, and sells cannabis in Canada. The company offers dried cannabis under the Time of Day and H2 lines; Elixir, a cannabis oil sublingual mist product line; and Decarb, an activated fine-milled cannabis powder product. It provides its products under the HEXO and Hydropothecary brand names. The company serves medical and adult-use markets.
What’s nice about the company is that it’s in a joint venture with heavyweight, Molson Coors to create non-alcoholic, cannabis-infused drinks, as well.
“Canada is breaking new ground in the cannabis sector and, as one of the country’s leading beverage companies, Molson Coors Canada has a unique opportunity to participate in this exciting and rapidly expanding consumer segment,” said Frederic Landtmeters, president and CEO of Molson Coors Canada.
Viking Therapeutics (VKTX)
Viking Therapeutics, Inc., a clinical-stage biopharmaceutical company, focuses on the development of novel therapies for metabolic and endocrine disorders.
Viking has two promising pipeline candidates.
Its VK2809 reported very positive results last year from a Phase 2 study that evaluated the drug in treating nonalcoholic fatty liver disease (NAFLD) and high low-density lipoprotein (LDL) cholesterol. Viking has plans to initiate a new clinical study of VK2809 in treating a severe type of NAFLD, nonalcoholic steatohepatitis (NASH), later in 2019. In addition, its VK4211 candidate showed great potential in patients recovering from hip fracture. Also, the company appears to be a buyout candidate, especially with its NASH candidate and the NASH market potential to be worth $35 billion in annual sales.