Global X Cannabis ETF (POTX - Free Report) topped the list of the best-performing ETFs of May with impressive returns of about 30%.
The rally was primarily driven by speculation that marijuana might help to prevent the deadly COVID-19 disease. A New York Post report showed that some strains of medical marijuana could be used in fighting coronavirus infections. The research, which was first reported in April and has yet to be peer-reviewed, suggested that medicinal marijuana could block up to 70% of the proteins used by the virus to infect cells.
Additionally, the cannabis industry jumped on an acquisition spree game after a silent year. This is especially true as Canada-based Aurora Cannabis agreed to acquire U.S. company Reliva for $40 million in an all-stock deal to enter the U.S. cannabinoid market. The transaction is expected to close in June (read: How Cannabis ETFs Beat S&P 500 Past Month).
Let’s take a closer look at the fundamentals of POTX.
POTX in Focus
This ETF seeks to invest in companies across the cannabis industry and tracks the Cannabis Index. The index includes the companies involved in the legal production, growth and distribution of cannabis and industrial hemp, as well as those involved in providing financial services to the cannabis industry, pharmaceutical applications of cannabis, cannabidiol (i.e., CBD), or other related uses including but not limited to extracts, derivatives or synthetic versions.
The product holds 27 stocks in its basket with Canadian firms accounting for 73.4% of assets while the United States takes 16.4% share. It has accumulated $12.3 million in its asset base and trades in average daily volume of 23,000 shares. The fund charges investors 50 bps in fees per year.
Though most of the stocks in the fund’s portfolio delivered strong returns, a few have gained more than 25%. 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 POTX
Sundial Growers Inc. : This Canada-based company operates as a pharmaceutical company. It produces and grows cannabis strains. It has gained 76.5% in a month. The stock makes up for 1.3% share in POTX (read: 5 Best-Performing Sector ETFs of May).
Aurora Cannabis Inc. (ACB - Free Report) : This Canada-based company is engaged in the production and distribution of medical cannabis. Aurora Cannabis occupies the top position in the fund’s basket with 10.7% allocation. It has also delivered incredible returns of 69.5% in a month. The stock has a Zacks Rank #3 (Hold) and VGM Score of F.
cbdMD Inc. (YCBD - Free Report) : This U.S.-based company owns and operates the consumer hemp-based cannabidiol brand, cbdMD. The stock has surged 69% in a month. It currently carries a Zacks Rank #3 and has VGM Score of F. YCBD accounts for 1.1% of total assets.
HEXO Corp. (HEXO - Free Report) : This Quebec-based is a consumer-packaged goods cannabis company. The stock takes the eighth spot in the fund’s basket with 4.9% of the assets. It has gained 31.5% in a month. HEXO has a Zacks Rank #2 (Buy) and VGM Score of F. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tilray Inc. (TLRY - Free Report) : This Canada-based pharmaceutical company develops cannabis based medicines, drugs, drops and oil products. Tilray occupies the second position in the fund’s basket with 8.1% allocation. It has gained 28.1% in a month. The stock has a Zacks Rank #3 and VGM Score of F.
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