Best cannabis stocks to buy in February: MSOS, TLRY, CRLBF

Cannabis stocks have started the year well. The AdvisorShares Pure US Cannabis ETF (MSOS) has risen by 43% this year, pushing its total assets to over $965 million. The smaller AdvisorShares Pure Cannabis ETF (YOLO) has risen by over 27% this year as hopes of better regulations in the US rise. The DEA is considering changing the classification of cannabis,

This article will look at some of the best cannabis stocks to buy in February. The caveat is that cannabis stocks have generally been bad investments in a long time. Most of them are not profitable and are still burning cash. Also, it is unclear whether there will be any changes in regulations in Washington, especially now that the government is deeply divided. 

Tilray Brands

Tilray Brands (TLRY) is one of the biggest cannabis companies in the world with a market cap of over $1.38 billion. The company has vast operations in the US and Canada. Most of its growth over the years has come from acquisitions.

Tilray Brands has not been a good investment over the years as it has lost over 97% of its value in the past five years. However, the likely catalyst that could push Tilray Brands higher is that it is no longer a pure-play cannabis company.

Instead, the company has diversified its business through acquisitions. These buyouts have transitioned it into the 5th biggest craft brewer in the United States. It is also the 12th biggest alcoholic beverage company in the country. Most recently, it bought a number of alcoholic brands from AB InBev. 

The most recent results showed that Tilray Brands’ cannabis revenue rose by 35% to $67 million while its beverage revenue jumped by 117% to $47 million. Therefore, the company will benefit from its diversified business in the coming months.

Cresco Labs

Cresco Labs is a large cannabis company valued at more than $899 million. It is a company that owns several cannabis-related brands like Cresco, High Supply, FloraCal Farms, and Good News, among others. It also owns dispensaries and Sunnyside, a platform where people can buy flowers, edibles, concentrates, capsules, and vapes.

Like other companies in the industry, Cresco Labs’ business has not been growing. Its revenue in the most recent quarter dropped to $186 million from $206 million in the same quarter in 2022. Its losses also jumped to over $115 million. This performance explains why its stock has crashed by 68% in the past five years.

Still, the company is a high-risk and high-reward investment as the management seeks to reinvigorate growth. It will also benefit if cannabis’s classification is changed in the US.

AdvisorShares Pure US Cannabis ETF

The other good cannabis stock to buy is the AdvisorShares Pure US Cannabis ETF (MSOS). This is an ETF that tracks the biggest cannabis companies in the United States. The biggest constituent companies in the ETF are Green Thumb Industries, Curaleaf Holdings, Truelieve Cannabis, Verano Holdings, and Cresco Labs.

The benefit of buying the MSOS ETF is that it is a diversified fund that will do well if the cannabis business recovers and vice versa. Besides, it tracks some of the most notable names in the cannabis industry. However, the only issue I have with it is that it is a highly expensive fund with an expense ratio of 0.83%. Most ETFs have an expense ratio of less than 0.35%.