Gold and Cannabis: 4 Top Stocks to Buy and Hold

HEXO (TSX:HEXO)(NYSE:HEXO) is repositioning for pot growth, while two gold stocks appeal right now for steady wealth creation.

Image source: Getty Images.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn moresdf

Buying and holding cannabis stocks is still a relatively new idea. These types of stocks have generated more hype as momentum names to trade in the short term. But several cannabis producers are shaping up to be long-term buys. From eventual market dominance to merger potential, let’s explore the froth for hints of quality. Plus, gold stocks are teetering on the value-growth divide, but which ones are buys?

Pot stocks rallied in 2020 despite a rocky start

Before this bizarre year hit, cannabis markets were already highly volatile. Some cannabis investors may already have felt rightly justified in giving up on embattled names like HEXO after an 18-month run of disappointments. But the most bullish of its acolytes are now reaping the rewards of their loyalty.

A post-legalization wasteland of pot stock trading has left HEXO with a price to book of just 1.2. With shares now selling at just $5.50 apiece, HEXO could have more downside than upside. A cheap stock, to be sure, but one that is nevertheless selling at five times its median consensus target. After gaining 40% in just four weeks, this is looking like one to trim for the time being.

It’s not just a cannabis stock…

Village Farms International (TSX:VFF)(NASDAQ:VFF) is an interesting play. For those cannabis investors who need an excuse (other than upside in a new industry) to buy in, Village Farms offers at least two. The most obvious is that Village Farms is also big into agricultural produce.

As a cannabis stock, Village Farms’s exposure comes via its Pure Sunfarms operations. Pumping out tomatoes, bell peppers, and cucumbers, Village Farms is a also consumer staples pick masquerading as a momentum stock. There’s also a bit of energy production here, too. And while the latter might not qualify for inclusion in a green economy portfolio, there’s that second excuse to favour this promising marijuana play.

Going for gold stocks in 2021

Newmont (TSX:NGT)(NYSE:NEM) got overlooked this year when Warren Buffett singled out one of its closest competitors for a bit of uncharacteristic gold investing. However, Newmont is in some ways a stronger stock than many of its peers. While last year’s attractive valuation has been nibbled away but this years gold bull run, Newmont still packs a punch for its price tag.

Lundin Mining (TSX:LUN) is better known for its copper production than for providing access to gold markets. Zinc and nickel also feature high up on its list of mined metals. But Lundin Mining does indeed count gold assets among its selling points. In some ways, the growth and value stocks of 2020 are inversions of each other. Lundin’s three-month gains of 40%, for example, go some way to explain a P/E of 40 times earnings.

One thing that gold stocks have over cannabis names is the ability to add passive income to a personal investment portfolio. Dividend investors should take another look at Newmont’s moderate yield of 2.6%. Likewise, Lundin’s 1.5% dividend yield may appeal to the type of shareholder who appreciates some on-the-side income while their shares are appreciating.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Village Farms International Inc. The Motley Fool owns shares of Village Farms International, Inc. The Motley Fool recommends HEXO. and HEXO.

More on Cannabis Stocks

Cannabis smoke
Cannabis Stocks

Canopy Growth Stock: Is Now a Good Time to Invest?

The road ahead is highly uncertain for Canopy Growth, as the stock is plagued with losses and seemingly unsurmountable industry…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

TLRY Stock: Should You Invest Now?

TLRY is a Canadian cannabis stock which is trading 91% below record highs. Let's see if you should own TLRY…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Is Tilray Stock a Buy in February 2023?

Despite the volatile cannabis sector, Tilray could be a superb buy for long-term investors.

Read more »

Young woman sat at laptop by a window
Cannabis Stocks

Is SNDL Stock a Buy in February 2023?

SNDL is a beaten-down cannabis stock. While its revenue growth is exceptional, a weak balance sheet has driven stock prices…

Read more »

A cannabis plant grows.
Cannabis Stocks

TLRY Stock: Here’s What’s Coming in 2023

Tilray Inc. (TSX:TLRY) is geared up for big growth this decade and looks like one of the top cannabis stocks…

Read more »

A person holds a small glass jar of marijuana.
Cannabis Stocks

Canopy Growth Stock: Here’s What’s Coming in 2023

Canopy Growth stock has made a lot of new moves in the last few months, but where is the company…

Read more »

A cannabis plant grows.
Cannabis Stocks

Better Cannabis Buy: Canopy Growth Stock or Tilray?

Only two TSX weed stocks can deliver substantial returns in the highly anticipated growth of the global cannabis market.

Read more »

Medicinal research is conducted on cannabis.
Cannabis Stocks

Is Tilray Stock a Buy in January 2023?

Tilray stock has lost 50% of its value in the last 12 months, in line with its peers.

Read more »