The best growth stocks included above all trade on a major U.S. stock exchange and meet the following criteria:
- Consensus analyst recommendation of “buy” or better. A high number of analyst “buy” ratings indicates an expectation that the stock will outperform the overall market.
- Market capitalization of at least $1.5 billion. If a company has a leading market share and competitive advantages in a sizable industry, it will have a market cap greater than $1.5 billion. This shows investor confidence in the company and its ability to position itself as an industry leader.
- Holding in the Cambria Cannabis ETF (TOKE). The TOKE ETF is one of the best-performing cannabis ETFs for 2023 despite its negative return to date. This ETF seeks capital appreciation from global equity markets that have exposure to the broader cannabis industry.
- Relatively high year-to-date returns. As mentioned, the cannabis industry has struggled in 2023, meaning some of the returns you see are negative. However, these returns are still better than most in the industry.
Why other stocks didn’t make the cut
While some stocks may be worth considering due to their position in the industry, they typically don’t make the cut based on the criteria in the methodology above. For instance, they may be part of the TOKE ETF but have significantly negative year-to-date returns.
Of course, as an emerging industry, cannabis developments can change rapidly. Stocks that make the list this year might be laggards in the coming years, and those that didn’t make the cut could become industry leaders.
Many factors could influence the winners and losers, from regulatory outcomes to who can secure the most capital. Those who believe there will be growth in the cannabis industry must be patient as policies continue to take shape.