cbd investments

These are the marijuana stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in the early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves (or returns to) profitability. The P/S ratio shows how much you’re paying for the stock for each dollar of sales generated.

The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution, and sale of medical and recreational marijuana. Cannabis has begun to gain wider acceptance and has been legalized in a growing number of nations, states, and other jurisdictions for recreational, medicinal, and other uses. Some of the biggest companies in the marijuana industry include Canopy Growth Corp. (CGC), Cronos Group Inc. (CRON), and Tilray Inc. (TLRY). Many big marijuana companies have continued to post sizable net losses as they focus on investing in equipment to speed up revenue growth.

These are the marijuana stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue organically or through other means, and find growing companies that have not yet reached profitability. In addition, earnings per share can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.

Best Value Marijuana Stocks

Momentum investing is a factor-based investing strategy in which you invest in a stock whose price has risen faster than the market has as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform will not suddenly disappear. In addition, other investors, seeking to benefit from the stock’s outperformance, will often purchase the stock, further bidding its price higher and pushing the stock higher still. These are the stocks that had the highest total return over the past 12 months.

Below we look at the top five marijuana stocks with the best value, the fastest growth, and the most momentum.

GRWG is top for value and growth, and IIPR is top for momentum

Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have dramatically underperformed the broader market. MJ has provided a total return of -28.6% over the past 12 months, well below the Russell 1000’s total return of 25.2%. These market performance numbers and all statistics in the tables below are as of Jan. 6, 2022.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

With the tremendous growth in the market, investors have expressed keen interest in CBD, and the number of publicly-traded stocks has skyrocketed. Before discussing the sector and some of the stocks, I want to be real clear about the risks, as it is easy to get caught up in the hype without being aware. First, as I have discussed above, investors need to understand that the regulatory landscape is in flux, though it appears to be headed in the right direction. There are scenarios where the federal government’s policies could potentially impede the ability of companies to operate as freely as they do today.

Another risk is that the opportunity of CBD has attracted many opportunists. Many of the publicly-traded companies don’t appear to be real, with several trading on the OTC that don’t even file with the SEC, including one of the first public companies in the space, Medical Marijuana, Inc. This is a red flag, and I highly recommend that investors avoid any stock that doesn’t file with the SEC. The market has also seen a number of companies suddenly decide to enter the space. While some of these appear to be more substantive than others, a sudden change in business models is certainly a yellow flag, and investors should be slow to credit companies for just simply stating their intentions.

The industry prospered despite the lack of regulatory clarity, with only slight push-back from the federal government, with the FDA taking actions against companies on three occasions. Warning letters were sent in 2015 to several companies for making health claims that weren’t supported as well as for not having purported levels of CBD. In 2016 and 2017, it again issued letters to online retailers who were making unsubstantiated health claims. At the state level, many of the sellers advertised their products as “legal in all 50 states”, but this was not the case, as several states, in fact, did not allow it. Over the last few years, there have been only isolated instances of regulatory action, typically at the local level.

The mainstreaming of CBD began years ago, with the 2013 CNN Special ‘Weed’, hosted by Dr. Sanjay Gupta, bringing attention to the potential health benefits of CBD to a global audience. Despite a murky regulatory environment, several companies were extracting the compound from industrial hemp grown outside the United States and importing the paste into the United States and then converting it into products like tinctures. At the time, very little lab-testing was being done. In 2014, the federal government passed the Farm Act that permitted pilot programs for hemp production in states that permitted it. Some CBD companies began to manufacture products from hemp grown in states like Kentucky and Colorado, while others, maintaining a more conservative stance, continued to import the base material, suggesting that the Farm Act didn’t permit commercial activities but only research.

I follow three companies most closely, including Charlotte’s Web (a client at New Cannabis Ventures), CV Sciences and Elixinol Global. Each of them has a good reputation in the marketplace, a long record of being in the business, strong financials and a high level of revenue and growth. Charlotte’s Web, founded by the Stanley Brothers of Colorado, who were featured in that Sanjay Gupta 2013 documentary and profiled just this week in the New York Times, is the clear leader at present. In Q3, it generated sales of $17.7 million and was profitable. CV Sciences reported sales of $13.6 millon in Q3 with positive EBITDA and is scheduled to report Q4 this week. Investors will be looking for continued sales momentum as well as possibly news about a potential uplisting to the NASDAQ, a move that could be a catalyst for its two peers as well. Elixinol, a highly successful IPO in Australia last year, has three lines of business, the largest of which is related to CBD. In Q4, it generated overall sales of A$11.8 million (US$8.4 million). It didn’t break out the quarter by segment, but CBD represented 88% of sales for all of 2018, with the balance in hemp food.