HEXO top pick for 2021LINK
https://www.fool.ca/2021/02/06/dont-forget-pot-stocks-1-high-upside-investment-for-2021/ My top pick for 2021
During the last cannabis bull run, investors focused on raw production. In the next bull run, they’ll focus on valued-add products. No pot stock is better positioned than HEXO (TSX:HEXO)(NYSE:HEXO).
Consider the success of Coca-Cola. It sells completely commoditized ingredients that cost pennies to produce. Yet a bottle of Coke sells for many times the production cost. The magic is to add value to the packaged commodities through branding.
When pot stocks take off next, it’ll be the value-add brand businesses that soar. This is exactly what HEXO was built for.
When the competition was busy ramping raw production, HEXO opted to forge industry relationships. Through strategic partners, the company believed it could beat other pot stocks to market with high-margin brands that resist price deterioration. One of its first partners was beer behemoth Molson Coors.
“They formed a new company with the partnership, named Truss,” explained one analyst. “The new drink company already sells cannabis and CBD drinks throughout Canada. The next step for this enterprise is to introduce a CBD drink in Colorado, while using Molson Coors connections and distribution lines in America.”
HEXO aims to replicate this partnership in other categories, including edibles, cosmetics, and sleep aids. By using existing brand names, this pot stock can ride the next wave of marijuana fervor, which should focus on value-add products.
Should you invest?
Pot stocks are notoriously volatile. Don’t invest unless you’re willing to take the long view.
With HEXO, the valuable pieces are in place. It should build on the Molson partnership this year, ramping sales while securing additional deals.
If pot stocks catch fire again this year, HEXO will lead the pack.