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Inside the Top-Performing ETFs of Q1

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Sweta Killa
·4 min read
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Amplify Seymour Cannabis ETF CNBS topped the list of the best-performing ETFs of February with impressive returns of about 60%.

The rally came on the wave of wider legalization as well as the growing adoption of marijuana in more states. In particular, Virginia lawmakers last month approved the legalization of recreational use of marijuana by 2024. With this, it becomes the 16th state and the first in the South to legalize recreational adult-use marijuana. Five states — New Jersey, Arizona, South Dakota, Montana and Mississippi — also legalized marijuana through ballot measures last year.

Meanwhile, the Biden government has the friendliest political environment for the cannabis industries in U.S. history, as it will expedite the legalization of marijuana at the federal level (read: 5 Best-Performing Sector ETFs of Q1).

Additionally, deal activities and robust earnings from companies such as Tilray TLRY have strengthened the bullish case for the marijuana stocks. Further, these have also been boosted by social media traffic and the Reddit trading boards’ frenzy. According to one source, the cannabis market was at $22.9 billion in 2020 and is projected to see a CAGR of 18.1% in the forecast period (2021-2026).

Let’s take a closer look at the fundamentals of CNBS.

CNBS in Focus

This ETF is actively managed and invests 80% of its assets in securities of companies with 50% or more of their revenues from the cannabis and hemp ecosystem. It holds 28 stocks in its basket with key holdings in cultivation & retail, agricultural technology, pharmaceuticals/biotechnology and investing & finance. More than half of the portfolio is dominated by mid-cap stocks while small-caps take the remainder. The product has accumulated $146.9 million in its asset base and trades in an average daily volume of 327,000 shares. The fund charges investors 75 bps in fees per year (read: 5 Top-Ranked Mid-Cap ETFs for Outperformance).

Though most of the stocks in the fund’s portfolio delivered strong returns, a few have gained more than 40% in the first quarter of 2021. Below we have highlighted the five best-performing stocks in the ETF with their respective positions in the fund’s basket:

Best-Performing Stocks of CNBS

Tilray Inc. (TLRY): This Canada-based pharmaceutical company develops cannabis-based medicines, drugs, drops and oil products. Tilray makes up for 1.8% allocation in the fund’s basket. It has gained about 166.8% so far this year. The stock has a Zacks Rank #3 (Hold).

Organigram Holdings Inc. OGI: This Canada-based company is a licensed producer of cannabis and cannabis-derived products primarily in Canada, through a wholly owned subsidiary. It has skyrocketetd 156.4% in the first quarter. The stock makes up for 2.9% share in CNBS. It has a Zacks Rank #3 (Hold).

Aphria Inc. APHA: This Canada-based company produces, supplies and sells medical cannabis primarily in Canada. Aphria occupies the second position in the fund’s basket with 9.5% allocation. It has jumped 154.5% in the quarter and has a Zacks Rank #3 (read: 5 ETF Winners of Coronavirus Pandemic).

GW Pharmaceuticals PLC GWPH: This Salisbury-based biopharmaceutical company is focused on discovering, developing and commercializing therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas. The stock takes the fifth spot in the fund’s basket with 6.9% of the assets. It has gained 88.6% so far this year. GWPH has a Zacks Rank #3.

Zynerba Pharmaceuticals Inc. ZYNE: This Devon-based specialty pharmaceutical company is focused on developing and commercializing proprietary synthetic cannabinoid therapeutics formulated for transdermal delivery. The stock has surged more than 42% so far this year. It currently carries a Zacks Rank #3 and accounts for 1.03% of total assets.

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GW Pharmaceuticals PLC (GWPH) : Free Stock Analysis Report
 
Zynerba Pharmaceuticals, Inc. (ZYNE) : Free Stock Analysis Report
 
Aphria Inc. (APHA) : Free Stock Analysis Report
 
Tilray, Inc. (TLRY) : Free Stock Analysis Report
 
Organigram Holdings Inc. (OGI) : Free Stock Analysis Report
 
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