Business Corpus: Best Stocks Of 2018: This Cannabis Company, Software Industry Come Out WinnersThe best stocks of 2018 reflect innovation and changes in American society. A medical marijuana company is No. 1, but other industries dominate the list. The post Best Stocks Of 2018: This Cannabis Company, Software Industry Come Out Winners appeared first on Investor's Business Daily.

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The best stocks of 2018 reflect innovation and new frontiers, and this year's list of top stocks also reflects changes in American society.

Tilray (TLRY), a major supplier of marijuana for medical purposes, was the best performing stock of 2018. Its gain was far above the next best stock, Twilio (TWLO), and well above the rest of the top 100. Tilray went public July 19 at 17 a share and is ending the year more than 300% higher, quoted at around 70.

That's actually 75% less than Tilray's share price at its peak of 300. The stock cleared a short consolidation Aug. 20 and soared 777% from the 34.20 buy point of an IPO base to the peak about one month later.

2018 Stock Market In Review (PDF)

It was a hyperbolic advance that reminded many investors of manias like the dot-com bubble. Tilray unraveled faster than its meteoric rise. Just three days after the peak, the best stock of 2018 lost two-thirds of its value. Tilray has been volatile in the time since.

Insane volatility like that reflects the big uncertainties of the emerging cannabis industry. But there wouldn't even be a cannabis stock if it weren't for the growing acceptance of marijuana, first in medical uses and more recently for recreational use. Tilray, based in Canada, supplies cannabis flower and extract products to health care providers and patients. This month, Tilray announced a pact with Novartis (NVS) to distribute medical marijuana.

Ten U.S. states have legalized marijuana for recreational use, and cannabis is legal for medical use in 33 states. A few more states could legalize in 2019. Some tobacco and liquor companies are exploring cannabis products.

See The List Of The 100 Best Stocks Of 2018

Software, Health Care Among Best Stocks Of 2018

The list of the 100 best companies of 2018 includes only stocks with average daily trading of at least 100,000 shares or more that started the year at a price of 12 or more. Closed-end funds are excluded.

No other marijuana stock besides Tilray made the year's top 100 best stocks, and the bulk of winners were in two sectors: software and health care.

Of the 100 best stocks of the year, nearly one-third are software companies. Enterprise, security, database and other types of software companies made impressive climbs before the bear market of late 2018 pared their gains. IBD's software sector is up about 11% for the year, and one of only four sectors (out of 33) to post a gain for 2018.

In health care, about a dozen stocks surged roughly 50% to 200% for the year. Biotechs accounted for about a dozen of 2018's top 100 stocks. That's a big chunk for any industry, although down from the 31 stocks that made biotech the dominant group of 2017.

Biotechs are a tricky industry in which to invest. Many companies are unprofitable; share prices move mainly on speculation of drug breakthroughs or setbacks in trials. It's an industry that calls for precise stock picking.

Allakos (ALLK), which went public in July, was the No. 3 winner and the best-performing biotech. The company develops antibodies to fight allergic, inflammatory and proliferative diseases. It's expected to continue losing money in 2019 and has no revenue so far.

The medical products group had about eight stocks in the top 100. It's where some amazing inventions are being put to use.

Glaukos (GKOS) makes iStent, a metal rod implanted into the eye that cuts the pressure that causes glaucoma, a disease that leads to blindness. Abiomed (AMED) makes the world's smallest heart pumps. The Impella models are inserted through arteries. Genomic Health (GHDX) makes diagnostic tests for breast and prostate cancer treatment.

Twilio Is No. 2

No. 2 stock Twilio is a perfect tool for the world of apps. Its core product is a software platform that enables app developers to embed voice, text messaging and video into their products. After several years of losses, Twilio is turning profitable this year, and analysts expect it to earn 16 cents a share in 2019, up 45%.

A few other noteworthy winners:

Crocs (CROX) has been making a comeback as the stock extends a rebound that started in May 2017. It is the best footwear stock of 2018.
New issues Zscaler (ZS), Goosehead Insurance (GSHD) and Inspire Medical (INSP) more than doubled in their first year.
Only two internet companies (Etsy (ETSY) and Carvana (CVNA)) and just one semiconductor company, Integrated Device Technology (IDTI), made the top 100. Integrated Device is being acquired.