Investing for the long term takes patience and discipline to stay the course. It's not necessarily easy, but the payoff can be significant. Right now, a lot of the hype is around Nvidia and other tech stocks involved with artificial intelligence, but many of those stocks are already trading at exceptionally high valuations. For investors, that means there may not be much more upside available.
Instead, there's another compelling option to consider that's outside of tech, and that may be a more intriguing opportunity for growth investors: cannabis.
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The U.S. hasn't legalized cannabis, but it has recently rescheduled FDA-approved marijuana products from Schedule I to Schedule III, which is a huge milestone for the industry. More reform could be coming, and the hope is that this could be the first step toward potentially legalization in the future. That's not on the horizon just yet, and there's no guarantee what will happen in the future, but the government does appear to be considering the benefits of marijuana, which is an encouraging sign.
According to estimates from Fortune Business Insights, the global cannabis market could be worth more than $1.4 trillion by 2034, up from just under $138 billion this year. This assumes greater legalization and access to medical and recreational products, and it highlights the significant potential for growth as this translates into a compounded annual growth rate of more than 34%.
One of the most popular cannabis stocks to invest in is Tilray Brands (TLRY 3.11%), a Canadian-based company that has long been eyeing opportunities in the U.S. market. It has even expanded into U.S. craft brewers as a way to expand its presence in the U.S. without having to rely on marijuana legalization.
Tilray is not necessarily the safest cannabis stock to own, as it routinely incurs losses and continues to burn through cash. But when there is talk of legalization, or there are hopes of reform in the U.S., it often surges in value. There are also multi-state operators to consider, such as Curaleaf Holdings and Trulieve Cannabis, which may more directly benefit from marijuana rescheduling in the U.S.
Regardless of the stock, however, investing in cannabis will involve taking on some risk. But if you're willing to do so and can be patient and hang on for the long haul, buying these types of stocks while their valuations are low can result in significant gains later on, making them potentially enticing options for growth-oriented investors.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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The cannabis industry could be on the cusp of significant growth in the coming years.