The Lows and Highs of Cannabis StocksOctober 4, 2019 10:04 am
As reported by MarketWatch, following the results of a recent Cato Institute poll that found American public sentiment shifting toward decriminalizing all drugs, cannabis stocks reversed earlier losses.
As the report details, while previous polls have revealed a growing number of people in favor of legalizing marijuana, there has been little support for changing broader policy issues that covered all drug offenses, not just for marijuana.
As the poll helped Horizons Marijuana Life Sciences ETF reverse its early losses, MarketWatch quoted Korey Bauer, a portfolio manager at the Cannabis Growth mutual fund from Foothill Management, advised investors that valuations for a select group of cannabis companies were increasingly appealing. But Bauer also cautioned investors to be “very selective” right now. Case in point: the public sentiment around vaping-related illnesses.
Yahoo Finance was even more optimistic about the investment potential of cannabis.
Citing Arcview Market research: “The scale of the U.S. market compensates for the patchwork legalization landscape; U.S. legal cannabis will account for 80 percent of global sales this year.”
In particular, says Arcview CEO Troy Dayton, it’s the cannabis compound cannabidiol (CBD) that will drive cannabis sales through 2024.
As many know, CBD products are everywhere: pharmacies, grocery stores and more. Their increased popularity is due to the purported benefits of CBD for managing pain and anxiety and improving sleep, without the high-inducing effects and stigma of its fellow cannabis compound, tetrahydrocannabinol (THC). (Forbes breaks down the cannabis plant here.)
Says Yahoo Finance:
“In a report released earlier this summer, retail data analytics firm Nielsen points out that the initial legalization cannabis focused on dried flower products but that the upcoming wave of new derivative products, oils, edibles, and drinks have both higher gross margins and no supply chain bottlenecks. The Nielsen report predicts the US cannabis market reaching $41 billion by 2025.”
Savvy investors would be wise to get in early, says Yahoo Finance. The TipRanks’ Stock Screener tool revealed three small-cap marijuana companies with well over 100 percent upside potential:
Green Thumb (GTBIF), Supreme Cannabis (SPRWF) and OrganiGram (OGI).