The first quarter of 2021 was great for the cannabis sector. The industry saw a ton of growth and the budding sector will continue to increase as more companies become public in Canada and the U.S. Here are some of the best-performing cannabis stocks in the first quarter.
In the first quarter, the cannabis-focused ETFMG Alternative Harvest ETF had a nice 40% growth. This index was designed to measure the performance of different companies within the cannabis sector. It also tracks how it beneﬁts from global medicinal and recreational cannabis legalization initiatives.
OrganiGram Holdings: +134%
At the end of the first quarter, Canadian producer OrganiGram Holdings ended Q1 with an overall growth of 134%. There were two major catalysts that can be attributed to its growth.
One major catalyst that helped boost OrganiGram’s stock price was the Reddit frenzy in early February—even though the short interest wasn’t particularly high at the time. Retail investors chased after the momentum of some penny stocks. These included companies with a share price that ranged between $1 and $6, and OrganiGram fit that for retail investors.
The second catalyst that occurred was on March 11, when OrganiGram announced it had entered into a collaboration with British American Tobacco. The research and development company that’s focussed on developing derivative products like CBD took a 20% equity stake in OrganiGram.
Sundial Growers: +105%
Another cannabis stock that had a fantastic Q1 was another Canadian producer, Sundial Growers. Sundial was another stock that was caught up in the Reddit frenzy that occurred in late January and early February. The stock also doubles as a penny stock, which creates double the attraction for retail investors.
For much of the first quarter, retail investors on the WallStreetBets subreddit have banded together to buy shares and call options in stocks that have high levels of short interest.
Sundial Growers has a high short percentage, relative to its float. The short percentage of float as of Mar 31, 2021 was at 11.66%. The goal of retail investors was to trigger a short squeeze. It is an event where a stock’s share price skyrockets or using the WallStreetBets phrase “to the moon.”
There was a point in February where the Sundial stock was up over 500% on a year-to-date basis. At the end of Q1, Sundial was up 105%, even after the entire Reddit frenzy.
This stock has already been mentioned before, but with an overall growth of 153% at the end of Q1, it deserves another mention. The Aphria and Tilray merger has played a key role in pushing both companies higher.
Tilray was also swept in by the Reddit wave back in February. Tilray has been for a long time one of the most short-sold pot stocks. It has a short percentage float of 17.38% with 28.49 million shares being held by short-sellers.
As always, these are just a few samples of a much broader market. The stocks mentioned here just had a stellar first quarter and there is still the rest of the year to see if any other companies can replace them.