TABLE OF CONTENTS
The legalization and increasing acceptance of marijuana for both medical and recreational purposes have led to a spectacular boom in the cannabis business in recent years.
Investors looking to profit from this quickly growing industry have a plethora of options in this booming market.
We've put together a comprehensive guide to the best marijuana stocks to buy right now to help you navigate this exciting market.
It covers everything from the most popular cannabis stocks to the top cannabis penny stocks, top-performing cannabis companies, and the future prospects of cannabis stocks, as well as a historical summary of performance.
Investing in marijuana stocks isn’t for everyone, especially if you don’t like market volatility. However, placing the right bet on the most promising cannabis companies can yield big rewards. How do you know where to invest? Due diligence is critical before investing in the cannabis industry.
While the stock market can easily wipe you opt, there is lot of opportunities to make life changing fortunes from this market. It is estimated that the value of the legal cannabis industry will hit $73 billion by 2027.
However, greed is greatly discouraged in this trade, it is the one thing that can finish you before you can even get to say ADA. Not to scare you though. With this short guide that we have crafted for you should be able to hedge you risk and maximize your earning potential from lucrative pot stocks.
That’s what the stock market is all about.
Fundamentals For Marijuana Stocks
Marijuana stocks are similar to other stocks that you might have traded in the past. However, the market is subject to steep volatility once in a while due to the fluidity of the laws in the cannabis industry. Note that this presents a lucrative trading opportunity for scalpers and day traders.
However, if you are looking to harness the true potential of the industry a long-term approach will better your odds at profitability. In this case, the underlying principles aka fundamentals should guide your investment strategy.
1. Look At The Management Team
Novice investors usually fail to scrutinize the management team of cannabis stocks that they are considering to invest in. This may need up being a grave and costly mistake that results in significant losses. Executives with a track record of success are likely to steer the company into profitability.
Consequently the long- term value of the pot stock will appreciate. On the other hand, poor management may be an indication of future massive losses in spite of current positive financials.
While the potential of the industry is significant, some companies will enjoy long- term profitability while others flop. The best predictor of this is the people at the helm of the company who are making key decisions. This includes the CEOs, finance managers, and other top executives.
2. Analyze The Business Strategy
The business strategy of any cannabis company is an indicator of the future financial prospects of that company. Take for example a Canadian based cannabis cultivator whose business strategy is restricted to the Great White North.
Compare this with a cultivator whose strategy extend to the US, UK, and other emerging market. When looking for a long-term buy the latter will have more promising prospects for profitability.
3. Analyze The Financial Status
Apart from the business strategy you also need to consider the financials of the cannabis stock that you are looking to invest in. Most cannabis companies are yet to achieve profitability, given the turbulence that has been witnessed in the cannabis industry since its inception.
However, this should not discourage you from investing in the industry. On the contrary consider this to be growing pains that are necessary for any nascent industry.
That said, there are a few signs that you should be on the lookout for when scrutinizing the financials of any cannabis company. Does the company have good cash flow, what are the sales like and how are they growing over time, what are the debts owed and what kinds of debt are they.
Are the expenses sustainable? What are the cost structures? Will the company out- perform its competition? Does the company look like it will achieve profitability in the near future?
Consider using financial analysis resources to come up with objective answers to these questions. This should guide you decision on which marijuana stocks to invest in.
4. Analyze The Marijuana Stock Valuation
This is done using metrics that are based on the historical performance of the stock. For marijuana stocks, the enterprise value is a good indicator of the total value of company. This gives you a basis for comparing the value of different marijuana stocks.
Best Strategies For Investing In Cannabis Stocks
The above factors should form your basis for analyzing the fundamentals of marijuana stocks. With that in mind, here are three valuable strategies that can help you to decide which promising stocks to invest in.
1. Investing in pure marijuana stocks
These are companies that are entirely hinged on the cannabis market meaning that most of their revenues are derived from the cannabis market.
These stocks potentially have high returns due to the growth prospects of the industry. On the flip side they are high risk stocks. Stocks that fall into this category include Canopy Growth and Aphria.
2. Investing in marijuana related stocks
These are companies that have interests in the marijuana industry but are not fully vested there. This approach lowers the investment risk but at the same time may also lower the profitability potential. Good examples of stocks that fall into this category include Constellation brands and Scotts Miracle- Gro.
3. Investing in marijuana ETFs
Marijuana ETFs are marijuana exchange-traded funds (ETFs) that allow you to invest in a couple of marijuana stocks. As you might have guessed, this helps to hedge your risk and increase your chances of profitability in the long run.
Currently there are only two marijuana ETFs in the market: the Horizons Marijuana Life Sciences ETF and the ETFMG Alternative Harvest ETF.
As mentioned earlier, the prospects for the marijuana industry are very encouraging. To make any gains from this market you need to be equipped with knowledge and muster the skills of a shrewd trader.
Ultimately, you need to develop your own unique investment style that suits your finances and lifestyle. You could be risk averse and therefore prefer to invest in safe stocks with the least volatility.
On the other hand you may prefer to be aggressive and try out high risk stocks.
Most Commonly Bought Cannabis Stocks
Strong trading volume, a sign of active interest and future growth, is often what attracts investors to a company. Among the cannabis industry's most popular stocks are:
Curaleaf Holdings (CURLF): Curaleaf is one of the top producers and suppliers of cannabis products in the US.
Aurora Cannabis (ACB) is a cannabis corporation based in Canada that possesses a substantial production capacity.
Hexo Corp (HEXO) is a cannabis company established in Quebec that is well-known for its cutting-edge goods.
Canopy Growth Corporation (CGC): Possessing a wide range of products, Canopy Growth Corporation is a pioneer in the Canadian cannabis industry.
What Are Marijuana Penny Stocks?
Marijuana penny stocks are cannabis companies with stock prices under $5 a share. Some penny stocks trade on large exchanges such as the New York Stock Exchange (NYSE) or Nasdaq, but many penny stocks trade via over-the-counter (OTC) transactions.
While marijuana penny stocks may seem like a bargain compared to other cannabis stocks, penny stocks are highly volatile, are less established than larger companies, and are at a higher risk for fraud.
Fractional share trading or high-quality companies with low share prices may be a better investment than marijuana penny stocks.
If you want to diversify your portfolio and take a gamble with penny stocks, follow best trading practices to protect your portfolio.
Interested in taking a risk with cheap pot stocks? Here are the top marijuana penny stocks now.
Jushi Holdings (JUSHF)
Jushi Holdings is one of the most exciting vertically integrated multi-state operators in the country. In December 2021, the company opened its 28th nationwide location and 18th dispensary in Pennsylvania, a major market for Jushi.
After dropping 54% from its record closing high, Jushi is set to come back with a vengeance. Jushi has been focused on limited-license markets, staking its claim before others do and has even made acquisitions in large markets like California. Jushi’s future looks promising.
OrganiGram Holdings is a Canadian cannabis producer that is experiencing its highest quarterly growth. On top of rising revenue, OrganiGram has experienced improved gross margins, lower operating losses, and an increasing market share.
A major investment from British American Tobacco in 2021 increased OrganiGram’s liquidity position, allowing them to better scale their operations. In December 2021, the company acquired Laurentian Organic from Quebec, a high-end producer of cannabis and hashish products. Consider this cannabis stock if you’re looking for a budget buy with potential.
Sundial Growers (SNDL)
2021’s hottest cannabis meme stock was on a roll, but can it continue its growth in the long run? Sundial Growers’s business model is based on its cannabis and investment operations. Sundial Growers is a pharmaceutical company that makes a wide range of cannabis strains.
In terms of the potential of its investments, its acquisition of Alcanna, a liquor and cannabis retailer might increase its retail presence in Canada, thereby increasing profits and its share price to avoid becoming delisted from the Nasdaq Exchange.
Columbia Care (CCHWF)
Columbia Care is a cannabis producer, manufacturer, and retailer in medical and recreational markets in 18 U.S. states and Europe. In 2022, the company expanded its large retail presence, including adding five shops in West Virginia and licenses in New York.
Columbia Care’s stunning revenue performance and increase in operating earnings during the 3rd quarter of 2023 could signal great things for the company. Its focus on limited-license markets and innovative retail practices could make it a force to be reckoned with.
High Tide (HITI)
Canadian cannabis retailer High Tide has a presence in the U.S. and Europe. Its acquisitions of grasscity.com, smokecartel.com, and CBDcity.com effectively increase its digital presence in addition to its 111 shops in Ontario, Manitoba, Alberta, and Saskatchewan.
In 2021, High Tide acquired a significant majority of NuLeaf Naturals in Colorado and its 11 brands. High Tide has its sights set on cannabis legalization in the U.S., which would allow it to increase its presence in the biggest market in the world.
Marimed Inc. (MRMD)
Marimed is one of the most underrated MSOs in the country and one of the cheapest buys, too. Marimed brands are sold across six U.S. markets and Puerto Rico. From November 2020 to February 2021, the company grew its stock price by 550%.
Marimed’s 3rd quarter 2021 earnings of $33.2 million were a 147% increase year over year. Compared to other MSOs, its valuation is very cheap despite reporting solid revenue and cash flow and little long-term debt.
Because of their low share prices, penny stocks have a higher potential for profit but also a higher risk. Among the most auspicious penny stocks related to marijuana are:
WM Technology (MAPS): WM Technology supplies software to cannabis companies and is involved in the cannabis auxiliary market.
Medicine Man Technologies (SHWZ): Medicine Man Technologies is a cannabis production and dispensary business that prioritizes premium goods.
Hydrofarm Holdings Group (HYFM): Hydrofarm Holdings Group supplies and equips the cannabis sector with hydroponic tools.
Real estate investment trusts (REITs) that lease facilities to cannabis growers are called Innovative Industrial facilities (IIPR).
Scotts Miracle-Gro (SMG) is a horticultural products company that offers a major exposure to the cannabis market. The company is diversified.
Top-Performing Cannabis Companies by Revenue
A company's revenue is a key determinant of its financial stability and room for expansion. The top-earning cannabis companies are as follows:
Curaleaf Holdings (CURLF): In 2022, Curaleaf Holdings brought in more than $1.2 billion.
Trulieve Cannabis (TCNNF): In 2022, Trulieve Cannabis brought in more than $900 million.
Cresco Labs (CRLBF): In 2022, Cresco Labs brought in more than $820 million.
Verano Holdings (VRNOF): In 2022, Verano Holdings brought in more over $670 million.
Prospects for Marijuana Stocks in the Future
Cannabis stocks have a bright future due to a number of variables.
Extending Legalization: The market for cannabis products is anticipated to rise sharply as more nations and states allow marijuana use for both medical and recreational purposes.
Growing Acceptance: As cannabis becomes more widely accepted, stigma is being lessened and a more positive atmosphere is being created, which is good news for the cannabis sector.
Diversification of Products: To appeal to a larger spectrum of customers, cannabis producers are extending their product lines beyond dried flower to include infused drinks, edibles, and topical treatments.
Expanding Scientific Research: Cannabis's therapeutic potential is the subject of growing scientific inquiry, which could result in new medical uses and a rise in demand.
Historical Data on Cannabis Stocks
Over the past ten years, cannabis stocks have had ups and downs, but overall the trend has been upward. The Horizons Marijuana Life Sciences ETF (HMMJ) saw its peak price of $37.86 per share in 2018. The ETF has demonstrated durability in the face of consecutive market drops, and it is presently trading at about $10 per share.
Cannabis Biotech Stocks
GW Pharmaceuticals (Nasdaq:GWPH) may be the most popular and recognizable biotech pot stock on the market. Ever since its novel drug Epidiolex received FDA approval in June 2018 for severe forms of epilepsy, its product demand has exceeded expectations. Epidiolex was developed to treat Dravet syndrome and Lennox-Gaustat syndrome.
Apart from its innovative research on epileptic disorders, GW Pharmaceuticals is undergoing Phase 3 trials for tuberous sclerosis complex and multiple sclerosis spasticity. They’ve also begun studying CBDV for Rett syndrome and autism spectrum-related disorders. Expect GW to ramp up its European expansion relatively soon.
Botanix Pharma (ASX:BOT) is an up-and-coming biotech company in the dermatology field. According to their company website, their “mission is to improve the lives of patients suffering from serious skin diseases including acne, psoriasis, and atopic dermatitis using a novel therapeutic and advanced transdermal drug delivery system.” Botanix’ proprietary drug delivery systems utilize synthetic cannabidiol to treat the following:
- Moderate-to-severe acne
- Plaque psoriasis
- Atopic dermatitis
- Mild acne
The company recently announced a clinical program to treat rosacea and received tens of millions in funding to move their scheduled clinical trials forward. The company’s strong leadership and innovative thinking may bode well for an industry that hasn’t seen the likes of approved dermatological CBD treatments.
Zynerba Pharmaceuticals (Nasdaq: ZYNE) is currently studying the effects of synthetic CBD treatment for extremely rare disorders including Fragile X Syndrome (FSX), Autism Spectrum Disorder (ASD), 22q11.2 Deletion Syndrome (22q), and developmental and epileptic encephalopathies. Zynerba recently was awarded a patent for a synthetic CBD treatment for ASD, which can complement its current lead product, Zygel™, used for multiple rare disorders.
Cara Therapeutics (Nasdaq:CARA) is another clinical-stage biotech company looking to create historic treatment models. Cara’s focus is on “a novel class of peripherally acting kappa opioid agonist therapeutics with a primary focus for the treatment of pruritus.”
Pruritus is associated with itchy skin and can develop along with chronic kidney disease, chronic liver disease, and atopic dermatitis. Cara Therapeutics is halfway through clinical trials for their proprietary formulations, which have, so far, proved to be significantly effective at reducing itch intensity.
MGC Pharmaceuticals (ASX:MXC),(MGCLF:OTC US) is a steadily rising European company with multiple phytomedicines including CannEpil for epilepsy and CogniCann for dementia and Alzheimer’s. Their “seed to pharma” approach focuses on research and development of various cannabinoid-based active pharmaceutical ingredients (API).
MGC’s leadership has plenty of experience in the biotechnology industry and its euGMP-certified facilities have helped expand its operations throughout Europe, Australia, and now, Asia.
Impression Healthcare (ASX:IHL) has a strong foothold in Australia with operations based in Victoria, Australia. In addition, they’ve also secured a deal with Cannvalate, Australia’s largest distributor of cannabinoid-based medicines. Impression Healthcare made its mark as an oral device company to aid in sleep apnea, snoring, bruxism, and sports-related teeth injuries.
They’re currently undergoing clinical trials in collaboration with the Swinburne University of Technology to research CBD treatment of concussion, traumatic brain injuries, periodontitis, and temporomandibular joint disorder.
In an effort to expand its commercial appeal and research real-world concussion treatment, Impression signed a deal with the MMA sports company, ONE Championship, in Asia.
Corbus Pharmaceuticals Holdings Inc.
Corbus Pharmaceuticals (Nasdaq:CRBP) has had some success in its clinical trials on its main product, lenabasum, for a wide range of conditions. Corbus bought the rights to the synthetic cannabinoid analog over a decade ago.
Today, it's moving forward with clinical studies for the treatment of inflammatory and fibrotic diseases. While some investors wait for more movement in the clinical trial phases, some investors aren’t waiting to bet large on this biotech stock.
Marijuana stock investors can consider biotech stocks in addition to more pure-play stocks relating to cannabis cultivation. Legalization across the world will provide cannabis biotech companies with even more opportunity to reduce symptoms in patients with common and rare disorders.
Choosing the appropriate cannabis biotechnology stocks to watch out for is not always easy to pick out of the many that keep popping up.
Research is well under way for new cannabinoid-based medicines. As these biotech companies continue to see positive results, their stock worth will inevitably go up. Now’s the time for risk-taking investors to seriously consider biotech stocks.
Marijuana Stock Investing Tips
It's important to carry out in-depth research and take into account various considerations while investing in cannabis stocks, including:
Company Fundamentals: Assess the competitive environment, management group, and financial performance of the cannabis organization.
Regulatory Environment: Evaluate the cannabis company's compliance activities while keeping an eye on current regulatory changes.
Risk Tolerance: Take into account your risk tolerance when making investing selections, as the cannabis industry is known for its natural volatility.
Now that you know some of the best marijuana stocks to buy according to online chatter, maybe it's time to give cannabis investing a try?
Keep in mind cannabis stocks have been highly volatile for many years, sometimes they go way up, and other times they can go way down.
Is marijuana a good industry to invest in?
We are still in the early stages of the cannabis industry. The market potential is huge, particularly as more states in the United States legalize cannabis. Purchasing these stocks carries a high risk but also a potential great return.
Fred Hernandez is a highly accomplished and versatile writer, boasting an extensive background in the cannabis industry. With an in-depth understanding of various sectors including cultivators, processors, retailers, and brands, Fred's expertise spans across the entire cannabis landscape. As a prominent contributor to CTU, he consistently delivers insightful articles exploring the latest developments, news, and regulations shaping the cannabis industry. Whether it's delving into the intricacies of cannabis products, cannabis strain reviews, or providing comprehensive analyses of cannabis laws, or sharing expert insights on cannabis cultivation techniques, Fred's wealth of knowledge positions him as an invaluable writer and educator for all cannabis-related subjects.