4 CBD Stocks to Buy for Mainstream Marijuana Profits

Traffic stats don’t lie: among investment categories, few have the draw of legal marijuana. And within this broad descriptor, companies specializing in cannabidiol, or CBD, have generated significant buzz. But what exactly is this three-letter acronym, and how can CBD stocks boost your returns?

Let’s start with basic definitions. Cannabidiol represents one of several cannabinoids, or chemical compounds found in the cannabis sativa plant. But unlike the most famous cannabinoid tetrahydrocannabinol (THC), CBD does not lever any psychoactive effect. In other words, users can enjoy this compound’s benefits without getting high.

This opens up profound opportunities for cannabis stocks that have exposure to CBD. First, since this compound inherently lends itself to medicinal use, it encounters favorable legislation. Most states allow CBD use for therapeutic purposes. Given political and public sentiment, it’s not inconceivable that all states will eventually green-light cannabidiol.

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Second, CBD has the potential to help solve a huge societal problem. Turn on the news, and you’ll eventually find stories about the raging opioid crisis. What is less reported is that pharmaceutical companies contributed to the problem with highly addictive painkillers. Since cannabidiol is not physically addictive, it could be a viable replacement for many addictive opioids.

Finally, the U.S. may be the leader of the free world, but it stymies itself with antiquated laws. Our neighbors to the north became the first G7 nation to legalize recreational weed, while we classify marijuana as a Schedule I narcotic. Still, our laws will eventually reach the 21st century. When they do, cannabis stocks of all stripes should realize their full potential.

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In the meantime, here are four CBD stocks to consider adding to your portfolio:

Tilray (TLRY)

Source: Shutterstock When it comes to medicinal marijuana, few cannabis stocks have generated as much positive traction as Tilray (NASDAQ:TLRY). Last fall, TLRY stock soared to the stratosphere as the underlying firm received approval from the Drug Enforcement Administration to import weed for medical research.

While shares have since come down significantly from those highs, Tilray remains a powerful name among CBD stocks. Recently, management signaled that it will aggressively compete in the cannabidiol sector with its acquisition of Manitoba Harvest. Manitoba specializes in CBD-infused food and health products, providing Tilray a key advantage in the North American market.

From a technical perspective, speculators may want to dive into currently discounted levels. After the crazy phase in cannabis stocks dried up, several names fell under the radar. One of those is TLRY stock, which has mostly moved sideways this year.

But with CBD gaining momentum stateside, who knows how long this discount will last?

Aurora Cannabis (ACB)

Source: Shutterstock If you’re Canadian and a “botanical” enthusiast, you’re loving life. If you’re also invested in Aurora Cannabis (NYSE:ACB), just know that more than a few Americans hate your guts! With a giant, double-digit pop in ACB stock, though, I doubt that you’ll care too much.

Much of the enthusiasm towards this Edmonton-based CBD (and THC) firm came off the back of an analyst upgrade. Cowen Equity Research initiated coverage of ACB stock, rating it as “outperform,” and giving it a rich price-target premium.