Investor sentiment toward cannabis stocks is improving as stronger fundamentals and renewed optimism around U.S. policy changes lift the sector’s outlook. Institutional investors are taking a fresh look at both Canadian and U.S. opportunities, with demand stabilizing at home and export markets like Germany driving growth abroad.
BNN Bloomberg spoke with Frederico Gomes, director of institutional equity research for life sciences at ATB Capital Markets, who outlined his top picks in the space — High Tide, SNDL and Decibel Cannabis Company — and discussed how each is positioned for the sector’s next phase of growth.
Key Takeaways
- Investor sentiment in cannabis is improving as international exports and domestic balance drive stronger fundamentals.
- Germany has become a key growth market, with Canadian producers supplying more than half of the country’s cannabis imports.
- High Tide continues to expand its retail footprint in Canada and Europe while posting solid same-store sales growth.
- SNDL’s vertically integrated model and liquor retail business provide stability and cash flow for reinvestment.
- Decibel Cannabis Company is ramping up EU-certified production and exports, positioning for significant growth through 2026.
Read the full transcript below:
ANDREW: Time for Hot Picks, and today we’re focusing on cannabis stocks. Our guest has Calgary-based High Tide, the big retailer, as a top idea. He says the company has entered the German market and is becoming a distributor of medical cannabis in Europe. Let’s get more from Frederico Gomes, director of institutional equity research for life sciences at ATB Capital Markets. Frederico, thanks very much for joining us. Give us your take on High Tide. Why do you like the stock?
FREDERICO: Thanks for having me. High Tide is one of the largest Canadian cannabis retailers. They have a long runway for growth, and the market is consolidating. High Tide operates about 210 stores in Canada and has a long-term target of more than 300 stores. They’re opening 20 to 30 new stores each year, which gives them very attractive growth.
On top of that, they’ve reported strong same-store sales growth — about seven per cent year-over-year in the last quarter. The market’s consolidation is benefiting them. Outside of Canada, they recently entered the German market through an acquisition, becoming a distributor of medical cannabis in Europe. We see High Tide as a “growth at a reasonable price” story — a GARP story. The stock trades at around seven times EBITDA, growing revenue at double digits with margin expansion. We think adjusted EBITDA can grow at very attractive rates.
ANDREW: Tell us about SNDL, because they’re involved in both liquor and cannabis retailing.
FREDERICO: Yes, SNDL is a differentiated player in cannabis. They’re very unique in the space with a diversified platform that spans the cannabis value chain — from cultivation and manufacturing to retail. They operate about 180 cannabis stores in Canada. They’re the only Canadian producer that’s vertically integrated from cultivation to retail, and like High Tide, they’re seeing strong retail growth.
SNDL also has a liquor retail platform with around 160 stores in Western Canada, mostly in Alberta. That business provides steady cash flow, which they can reinvest in cannabis. In addition, SNDL has several U.S. investments, two of which are undergoing restructuring, and we expect SNDL to be able to monetize those investments soon.
ANDREW: And finally, Decibel Cannabis Company — DB.
FREDERICO: Decibel is a smaller player, about an $80-million market cap, but it’s flying under the radar. It’s one of Canada’s top five licensed producers with strong domestic brands. Most importantly, we expect very strong growth in the second half of this year and into 2026, driven by international exports.
Late last year, Decibel acquired AgMedical, a company that operated an EU-GMP certified facility — a certification required to export to European markets. Decibel has been ramping up production there, and we expect robust growth in the second half. The stock trades at about four times EBITDA with a double-digit free cash flow yield. It’s a very attractive name.
ANDREW: I’m sorry — they’re involved in indoor cultivation?
FREDERICO: Yes, Decibel has indoor cultivation. Through that EU-GMP facility, they can also export to international markets.
ANDREW: And apparently they’ve got more than 2,600 stores stocking their brands in several provinces, with retail sales of about $300 million. Frederico, what’s the latest in the cannabis investing space? Are investors still uncomfortable with the lack of sustainable profits?
FREDERICO: The Canadian cannabis environment has really improved over the past six months. Investors have become more bullish, and that’s reflected in stock performance. That shift stems from two key factors. First, international markets — especially Germany — are seeing strong growth. Canadian weed is very competitive there, and over 50 per cent of Germany’s cannabis imports come from Canada.
Second, the domestic market has become more balanced between supply and demand. Prices have improved, and with that, companies are showing stronger cash flow and profitability.
ANDREW: Frederico, thank you very much.
FREDERICO: Thank you.
ANDREW: Frederico Gomes, director of institutional equity research for life sciences at ATB Capital Markets.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| HITI CVE | N | N | Y |
| SNDL NASDAQ | N | N | Y |
| DB CVE | N | N | Y |
This BNN Bloomberg summary and transcript of the Oct. 10, 2025 interview with Frederico Gomes are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
