Marijuana stocks have given cannabis investors nothing but false starts over the past few years. Most recently, there were a plethora of issues facing the industry throughout 2022, including inflation, overproduction, lack of capital, job losses and cratering stock prices.
The Prime Alternative Harvest Index (opens in new tab), which tracks the performance of some of the cannabis industry's most prominent companies, delivered a fifth consecutive calendar year with double-digit negative returns. Perhaps worse: A $10,000 investment in the index at its inception on Dec. 18, 2017, would today be worth around $1,930.
The long-term prognosis for the cannabis industry is good. Ultimately, the following nine picks look like the best marijuana stocks (and funds) to benefit from this ongoing growth and maturation.
The beer, wine and spirits purveyor invested in Canopy Growth (CGC (opens in new tab)) in 2017, buying a 9.9% stake for $191 million. In 2018, it upped that stake to 36.6% by plunking another $3.9 billion into the Canadian cannabis producer for 104.5 million shares plus warrants to acquire an additional 139.7 million shares in the future.
Not forgetting that this is an article about the best marijuana stocks, British American Tobacco invested an additional $5.1 million last March in Canadian cannabis producer OrganiGram Holdings (OGI (opens in new tab)), bringing its stake in the company to 19.5%. The two continue to collaborate on new cannabis-related products.
By comparison, the MJ ETF follows the performance of the Prime Alternative Harvest Index, which in addition to tracking cannabis stocks, also includes cigarette manufacturers such as Altria (MO (opens in new tab)) and a 20.1% weighting in the ETFMG U.S. Alternative Harvest ETF (MJUS (opens in new tab)). As a result of the ETF weighting, the Canadian content in MJ is slightly less than 42%.
Just to crank up the risk a little bit more, nearly all marijuana stocks are penny stocks (defined as having a $5 share price and under) and trading on the over-the-counter exchanges. Though the OTC exchanges have done a good job with improving reporting standards in recent years, they're still nowhere near as stringent as the NYSE or Nasdaq, leaving investors to wonder if they're getting the most accurate and up-to-date financial information.
With so few marijuana stocks trading on reputable exchanges (e.g., NYSE or Nasdaq), investors might also be attracted to the largest pot stock of the bunch, GW Pharmaceuticals (GWPH). GW Pharmaceuticals has discovered more than five dozen cannabinoids from the cannabis plant, and it's testing these cannabinoids in a variety of ailments.
It may also be worth mentioning that there are only a small handful of marijuana breathalyzer developers at the moment, and they're penny stocks that trade on the over-the-counter exchanges, which are inherently risky and dangerous investments.
For that matter, many OTC penny stocks are usually avoided by mutual funds and hedge funds. This can lead to high levels of volatility, which can be unsettling for investors who aren't aware of the risks.
In addition to a dramatically greater number of companies today than in 2014, there are holders of stock from back then who are still underwater and likely looking to sell near their cost. I mentioned another factor, insider selling, and that has started to kick in as well. A week ago I wrote about several companies seeing sales by management and directors. Finally, truth week begins in the next few weeks. What is truth week The quarterly filings from most of the companies (those with years ending in December, March or June), which almost always seems to depress cannabis stocks for a variety of reasons, chiefly that the dilution and poor financial condition are revealed.
Schneider sold all of his other cannabis ventures and used $100,000 to buy his first B&B. Since then he has invested over $1 million, partly by going public with a penny stock he named The MaryJane Group. (More on that in a minute.)
Chinese electric car manufacturer, NIO (NIO Stock Report) also remains onthe Robinhoodpenny stocks list this month. Overall, the last 52 weeks has been brutalfor NIO stock. Its stock price has plummeted 60% over this time frame andcannot seem to establish a new low.
A mainstay on the monthly list of penny stocks on Robinhood has been Chesapeake Energy (CHK Stock Report). The company is an energy provider that has obtained oil and natural gas assets in the US. While the stock has declined throughout the last year, there have been moments where investors have seen nice returns. This energy penny stock showed 80% growth from January 2019 to April 2019.
Pot penny stock HEXO (HEXO Stock Report) joins the list of penny stocks Robinhood users are holding in portfolios this month. Since HEXO started trading on the New York Stock Exchange, its stock price is down 40%. While this is a significant drop, the entire cannabis sector has been getting beat down all summer. However, HEXO has been a good marijuana penny stock to watch over the last 2 months.
According to his 2018 financial disclosure form filed on Tuesday, Segerblom listed one of his sources of income from MPX Bioceutical Corporation, a Canadian-based cannabis company that operates in Arizona, Nevada, Maryland and Massachusetts. The company purchased Greenmart of Nevada, a cannabis cultivation and production facility located in North Las Vegas, for $19 million in May 2017.
Freetrade has plenty of cannabis stocks listed across a number of different stock exchanges with operations in numerous countries. These firms tend to operate in medicinal or recreational cannabis, but there are plenty of other cannabis stocks providing ancillary products and services from hydroponics to fertiliser.
So most UK cannabis stocks either specialise in CBD consumer goods, medical marijuana, or both. LSE-listed Kanabo only offers CBD products for the time being, but hopes to soon have a medical marijuana segment as well. In its most recent half-year earnings, the firm grew revenue by 7.1% to 15,000. But during that same period, Kanobo widened its loss by 113% to 1.2m.
It can be difficult to find a deal in the stock market regardless of current market conditions. For the last decade, stocks have traded well above historical average P/E ratios. Fortunately there are still a handful of undervalued stocks in corners of the market that most investors ignore. These penny stocks all have a super-low share price of $0.10 or less and are sorted by average trading volume in dollars. These companies are considered the most actively-traded stocks priced under $0.10. 59ce067264