3 Cannabis Stocks to Buy on the Rebound in June

There are more cannabis stocks than you can shake a stick at that have performed dismally over the past couple of months. Many of them, though, started out in 2019 with nice gains. Big up-and-down swings come with the territory when you invest in cannabis stocks.

However, some of these stocks are coming back, and more could be on the way to doing so. Three cannabis stocks that I think investors should consider buying on the rebound in June are CannTrust Holdings (NYSE: CTST), Canopy Growth (NYSE: CGC), and KushCo Holdings (NASDAQOTH: KSHB). Here's why these stocks look like good picks.

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1. CannTrust

By late March, CannTrust's share price had more than doubled year to date. And then everything fell apart. The stock crashed after CannTrust posted disappointing fourth-quarter results on March 28. But I think the long-term picture for CannTrust should look much better.

The company's phase 2 expansion at its Niagara facility should reach full capacity in the third quarter. That will give CannTrust an annualized production run rate of 50,000 kilograms of cannabis. CannTrust now has supply deals with all 10 Canadian provinces. I expect the company will be able to sell all the product it can produce.

Supply chain bottlenecks caused problems for CannTrust in the early months following the launch of the adult-use recreational market in Canada. However, the company has taken the right steps to resolve those issues. We should see improvement on this front in the coming quarters.

Where CannTrust could really shine in the future is in the cannabis derivatives market. The company is ramping up its outdoor growing capabilities with a focus on this opportunity. By the end of 2020, CannTrust expects to have an annual production capacity of at least 200,000 kilograms. It should also have a very low cost per gram associated with its outdoor cultivation. 

CannTrust's market cap currently stands below $800 million. I think the stock has plenty of room to run over the next few years as CannTrust cranks up its production capacity.

2. Canopy Growth

You've probably heard the old saying that "the bigger they are, the harder they fall." That might be true, but it really hasn't been the case for Canopy Growth recently. Canopy is the biggest cannabis producer by market cap, and its stock has dropped over the past couple of months. But Canopy's decline wasn't as bad as many of its smaller peers.

I still like Canopy Growth, for several billion reasons. I'm talking, of course, about the company's huge cash stockpile resulting from the $4 billion investment Constellation Brands (NYSE: STZ) made last year. While other Canadian cannabis producers are having to raise cash by issuing additional shares or senior convertible notes, Canopy has all the money it needs to fund operations and expansion efforts.

Don't underestimate how important this cash is to Canopy Growth. It's enabled Canopy to move into the skincare and sleep solutions market through its acquisition of U.K.-based This Works. Canopy has entered the U.S. hemp CBD market with its investment in building a high-capacity hemp production facility in New York state. And the cash from Constellation has helped Canopy pave the way to potentially jump into the U.S. marijuana market with its deal for the rights to acquire Acreage Holdings (NASDAQOTH: ACRGF) should U.S. laws change in the future.