Just like many new industries entering the markets, the whole cannabis sector is subject to speculation and huge fluctuations in stock prices, at least until the sector finds a balance. This, of course, can take several years. The lesson learned with tech stocks in the late ‘90s is that even successful leaders of industry struggle to maintain the high stock price they reach when hype is at its max. In other words, Microsoft stock reached its height of 58 dollars at the end of 1999, while today it sits at $36, and it’s unlikely to fluctuate greatly in the future because Microsoft is not a “growth company” anymore. Microsoft and other companies from the tech industry boom are now global giants that keep rewarding their investors and stock traders, but if you bought any tech stock in 1999 and kept it in your portfolio, right now you wouldn’t be so happy about your investment.
There are a number of services and product providers coming from outside the cannabis industry that have gotten on board since legalization gained traction. Most of these companies are considered hybrid plays since their business is not strictly focussed on the cannabis industry. But they would benefit a lot from strong growth in this sector. Plant nutrition, pest control, facility management, lighting systems, and hydroponics are some of these ancillary services and products.
RISKS AND OPPORTUNITIES OF AN EMERGING INDUSTRY
Even in the most optimistic worldwide legalization scenario, it is unlikely all these companies will generate enough profit to justify their actual price/future earnings ratio. Yet, this shouldn’t prevent us from scoping out future leaders and placing a bet as a long-term investment. Likewise, an experienced trader might want to buy some cannabis stock on their upward momentum, aiming to sell after a few hours, days, or weeks for a quick gain on the market hype.
As opposed, if you invested in the cannabis industry over the past couple of years, there’s a good chance that you are making some money, since many cannabis stocks have grown in price over the last 3 years. The bottom line is, “timing is crucial”. And by the way, back to the Microsoft example, it’s good to know that if your mom or grandpa had invested one month’s wage in a tech company back in the ‘70s and sold their stocks in 2000, you probably wouldn’t need to work today. This is the power of being early birds in emerging markets.
It is safe to say that all major tobacco and beverage corporations have their plans to enter the cannabis market as soon as it looks proper. Tobacco corporations are experiencing a decline in their traditional business, and for sure they won’t miss this train. As an example, Altria (NYSE: MO) is the company that makes Marlboro cigarettes, among many others. After being interested in buying a minority stake in the Canadian cannabis company Aphria, the tobacco giant may want to buy cannabis company Cronos Group, even if at the moment the companies have not yet reached an agreement. These kinds of rumours usually generate big swings in cannabis stock prices, which can be traded for a profit, or a loss.
Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.
Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.
Market Data and Calendars
MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.
MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.
© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.
GrowGeneration products include everything from marijuana seeds to the lighting, nutrients, trays, fans, filters, humidifiers, water pumps and hand tools needed to cultivate the recreational drug. People who consume marijuana don’t need GrowGeneration, but the people and businesses that grow the plant for commercial purposes do.
One of the steadiest and most consistent marijuana stocks year-to-date has been Denver, Colorado-based GrowGeneration. And for good reason. The company is the largest retail distributor of all the equipment needed to grow marijuana, both on large and small scales.
Canopy Growth also just announced plans to lay off 75 people in Canada and cut dozens more positions in Denmark as the company winds down operations in that Scandinavian country. Investors should take heart from the fact that the company continues to focus on rightsizing its operations in order to reach still-elusive profits.
The drama of the share price aside, there is reason for investors to feel optimistic about TLRY stock. The main reason for optimism is the upcoming merger with rival Aphria (NASDAQ: APHA ) in a $4 billion deal that will make Tilray one of the biggest marijuana producers in terms of production and revenue.
Here are seven marijuana stocks to buy as the south, and other regions of the U.S., go green: