Are marijuana stocks the greatest types of penny stocks to buy? Since speculation is playing a significant part right now, it's crucial to recognize that what you're seeing in the stock market today isn't typical. Looking at the last few years of the cannabis industry demonstrates quite the contrary. This is certainly a significant reason why there's been such an accelerated surge in so many marijuana penny stocks; traders have waited a long time for new developments to emerge on the legislative side of the sector.
Amazingly, while marijuana stocks haven't delivered the long-term profits investors have wished for over the previous five years, the cannabis business in the U.S. is highly thriving, despite a continued delay in federal legalization.
Stocks with very low share prices are often cheap for very good reasons. This can include worrying about keeping solvent, persistent losses, or operating in a highly competitive or unproven industry. The point is that while penny stock booms do astound from time to time, penny stocks are, far more frequently than not, money losses for investors.
Tiny corporations issue penny stocks in the legal marijuana industry. These stocks are priced at less than $5 a share.
Keep in mind that not all of these businesses are directly associated with marijuana. Certainly, the major stakeholders are cultivation businesses and retail dispensaries. Others, however, manufacture protective containers, rolling sheets, etc.
Researching the present situation of this appetizing sector is the first step in selecting the most lucrative cannabis stocks for investment. Colorado was the first state to legalize marijuana for recreational use, and sales for the fiscal year ending June 30, 2016, surpassed $1 billion for the first time in United States history. By 2022, the growth of medical marijuana and recreational marijuana in Colorado is anticipated to more than double.
There are divergent estimates for the growth of the marijuana business and divergent opinions regarding the best marijuana stocks to buy. The only thing on which they can all agree is that the marijuana business is a multibillion-dollar growing colossus not seen on the stock market for years. Some advisors, including GreenWave's Matt Karnes, predict that the compound annual growth rate for the marijuana industry will approach 35 percent by 2022.
Marijuana legalization on a federal level may increase the market by more than $50 billion over the next decade, according to the projections of other market analysts.
1. Marimed Inc. (OTCMKTS:MRMD)
Marimed is one of the most promising high-quality marijuana penny stocks to invest in prior to the return of investor optimism in the cannabis business.
The company sells its brands in six U.S. states and Puerto Rico. As investor interest returned to cannabis industry stocks between November 2020 and mid-February 2021, the company's stock price increased by 550 percent. The majority of the advantages have been preserved to this day.
Marimed's most recent quarterly sales of $33.2 million was a 147 percent year-over-year increase from the prior year's comparable sales. In contrast to its Canadian competitors, the company's average sales growth rate over the past three years was a robust 110 percent. Wall Street's projections for sales growth in 2022 remain around 21.9 percent, and growth is still abundant.
Notably, Marimed is a lucrative marijuana penny stock to buy. The business has reported increasing profitability and cash flow from operations. It is less reliant on new stock or debt financing, which reduces the risk of dilution for its equity investors. The company's balance sheet has a modest amount of long-term debt.
Marimed now has access to a new market and growth opportunity as a result of its recent product launch in Delaware and license arrangement with First State Compassion Center.
In the past three months, the average trading volume for Marimed shares was 591,132 shares. Although investors may feel more comfortable utilizing stop orders on trades, it has adequate liquidity.
2. High Tide (HITI)
High Tide, a Canadian marijuana merchant, is another marijuana penny stock that has a high propensity to respond strongly to optimistic market sentiment regarding marijuana stocks in the past year.
The price of HITI stock increased by 275 percent between November 1, 2020, and February 9, 2021, as investor fervor grabbed marijuana stock traders. During the presidency of Joe Biden, rumors of possible federal legalization of marijuana drove up the price of stocks in the business. Since then, High Tide stock has increased by 142%, retaining a portion of its profits to date.
Intriguingly, sales predictions for High Tide in 2022 indicate a potential growth of 90 percent this year. Losses ought to diminish when the company approaches positive normalized earnings in 2023. A pro-investment thesis regarding the marijuana penny stock High Tide is currently plausible.
The average three-month trading volume for the cannabis stock on the NASDAQ was 182,286 shares, compared to the Toronto Venture Exchange's 77,420 shares (TSXV).
3. Planet 13 Holdings (PLNHF)
Planet 13 Holdings, a Nevada-based cannabis producer and dispensary operator, saw its stock price increase by 147 percent amid a general boom in cannabis stocks from November 2020 to mid-February 2021. It took an entire year for shares to eventually give up the accumulated valuation gain; however, another surge could occur if optimism returns to the marijuana business.
Planet 13 Holdings created $140 million in revenue over the past twelve months and entered the fourth quarter of 2021 with a good cash position. Analysts anticipate the company's sales will increase by 23 to 54 percent in 2022, following a forecast 74 to 110 percent increase in 2021.
The company is acquiring Next Green Wave Holdings for 91 million CAD ($70,3 million) to provide a foundation for its upcoming expansion into Florida and Illinois and its current concentration in California.
The optimistic management team filed the company's common stock with the Securities and Exchange Commission (SEC) in January in readiness to up-list to a major U.S. stock exchange upon government legalization of marijuana business operations in the United States. The company is preparing for a post-legalization period that might catapult its business to new frontiers of growth, and the wave might carry shareholders to triple-digit capital gains.
The average trading volume of Planet 13 stock on the U.S. OTC Markets during the past three months was 521,805 shares (OTCMKTS). Therefore, it has adequate liquidity. Stop orders are still advised when trading this volatile marijuana penny stock in order to reduce trading risks.
4. Organigram Holdings Stock (OGI)
OrganiGram Holdings is a low-cost marijuana manufacturer with an expanding international market situated in Canada. The company just reported its biggest quarterly net revenue ever, with cannabis net sales increasing by 57 percent to $23.8 million CAD ($30,4 million CAD) for the quarter ending November 2021.
The recent sales increase was supported by an improvement in gross margins, a reduction in operating losses, and a near-breakeven net loss, while the company maintained its fourth-place market share position in Canada. Organigram predicts a 7,5 percent market share in the Canadian cannabis market by the end of 2020, up from 4.4 percent at the current time.
Last year, a strategic investment from tobacco giant British American Tobacco (NYSE:BTI) enhanced OrganiGram's liquidity and enabled the company to pursue expansion opportunities.
Notably, the price of OGI stock rose 354% during the cannabis stock market craze of late 2020 to early 2021. At the time of writing, OrganiGram shares were trading below $1.50 per share, making OGI a marijuana penny stock to invest in before optimism returns to the cannabis business.
The NASDAQ's three-month average trading volume of 6,027,689 shares compares well to the Toronto Stock Exchange's volume of 1,691,191. This stock's liquidity poses no concern.
5. Greenlane Holdings (GNLN)
Another marijuana penny stock that appears to be flying under the radar is GNLN stock. Nonetheless, the stock has substantial upside potential in the next few years.
Greenlane and Kushco have just agreed to unite to form a cannabis-related products and services firm. The combined entity's expected pro forma revenue for 2020 is $250 million.
Once the transaction is finalized by the end of the third quarter of 2021, the focus will shift to cost efficiencies and rapid growth. This is anticipated to increase the price of GNLN stock. Also noteworthy is the likelihood that the combined business will have a positive EBITDA (excluding synergies).
Greenlane also bought Eyce prior to the merger agreement with Kushco. This company is a market leader in silicone smoking products, and a portfolio of innovative products is likely to stimulate growth.
It is also important to note that the company's items will be sold (pro forma) via 8,000 retailers worldwide. The company already has a retail presence in the United States.
Overall, the GNLN stock appears attractive for accumulating. I would not be surprised if present returns were multiplied by multiples.
6. Hexo Corp (HEXO)
Earlier in the year, HEXO stock reached an all-time high of $11. The share stock has been in a correction zone and is currently $4.16. This appears to be an effective accumulation zone.
Hexo is already one of the leading cannabis companies in Canada. Additionally, the organization is investigating growth prospects in the United States and Europe. Hexo is well-positioned for continued growth due to its large addressable market.
Hexo's product selection is varied, including pre-rolls, oils-capsules, and vapes among its offerings. It is vital to note that the company's cash used in operations for the first nine months of 2020 was $93 million, and the cash used in operations for the current fiscal year decreased to $16.8 million.
The company is well-positioned to create positive cash flows as revenue growth accelerates. The company's portfolio of brands is of high caliber. Redecan, for instance, is one of the most profitable licensed producers in Canada.
Hexo has maintained an acquisition-driven expansion strategy. The company is in the process of acquiring Zenabis and 48North. With the acquisition of Zenabis, the company will be able to penetrate the European market. Additionally, 48North will boost the company's market position in Canada.
Clearly, HEXO stock is favorable given the likelihood of federal legalization of cannabis in the United States. In the coming years, the company's growth should accelerate.
7. Columbia Care (CCHWF)
Columbia Care is an American grower, manufacturer, and retailer of medicinal and recreational marijuana with a growing presence in 18 U.S. jurisdictions and in Europe.
In 2022, the company plans to open five more stores in West Virginia and acquire new licenses in New York, expanding to its already extensive number of cannabis dispensaries.
Historical double-digit revenue growth rates for Columbia Care have been excellent, and the reported increase in operating earnings during the third quarter of last year should pave the way for future profitable quarters.
During a period of optimism regarding the legalization of marijuana from late 2020 to February 2021, the share price increased by nearly 99 percent. Today's gains have been completely wiped away, but the stock has outperformed the S&P 500 by a large margin thus far in 2022.
Any restoration of favorable sentiment toward marijuana companies in 2022 might propel Columbia Stock significantly higher and out of the marijuana penny stock category this year.
The OTCMKTS's average three-month trading volume of over 500,000 shares indicates adequate liquidity for small retail investor deals.
8. Medical Marijuana Inc. (OTC: MJNA)
Medical Marijuana Inc. is the first cannabis company publicly traded in the United States. It is a holding corporation with companies that manufacture and sell various goods derived from hemp. Additionally, the company was the first to provide prescription CBD medicines for the treatment of epilepsy, Alzheimer's disease, Parkinson's disease, chronic pain, and migraines.
Medical Marijuana Inc. also made the cut since it was the first company to provide medical cannabis products to Mexico. The company is expanding internationally. Definitely a penny marijuana stock worth considering.
Check out that page if you're interested in larger marijuana companies. There are ten of the best investment opportunities in the industry, and they are more established businesses with substantial upside potential.
9. Nextleaf Solutions (OILFF)
At 17 cents a share, OILFF stock is one of the marijuana penny stocks that warrants a gamble. If the company's business gains traction, there is substantial upside potential.
Nextleaf Solutions is, in summary, a cannabis technology startup. The company develops and licenses extraction and distillation technology for cannabis.
The company's emphasis on innovation is one of my favorite aspects. Currently, the company has 80 patents in its portfolio. This comprises fifteen United States patents.
The company already has extraction agreements with various U.S. and Canadian white label cannabis growers. In addition, the long-term plan involves direct sales of consumer goods. Recently, the company inked a distribution and sale deal with the BC Liquor Distribution Branch.
Nextleaf solution is an early-stage firm that is primarily focused on increasing bulk sales and expanding its patent portfolio. In addition, innovation and consumer goods are likely to be the driving force in the coming years.
I would not consider a large exposure, but a tiny holding in the OILFF stock can generate multifold gains.
10. Jushi Holdings (JUSHF)
Jushi Holdings is a noteworthy multi-state, vertically integrated cannabis and hemp producer and retailer with operations across the United States. Recent product launches in Massachusetts could sustain the company's current growth trajectory.
Notably, the company has reported positive and growing adjusted earnings before interest, taxes, depreciation, and amortization expenditures (adjusted EBITDA) for multiple consecutive quarters, indicating that it is operating a marijuana business that is both lucrative and sustainable. The adjusted EBITDA forecast of $21–25 million for 2021 improves to $110–130 million for 2022.
Between November 1, 2020, and February 9, 2021, the share price of Jushi Holdings increased by a remarkable 198 percent as rumors of probable federal legalization in the United States sparked confidence among marijuana stock stocks. Shares have risen 15 percent thus far this year and could raise more in 2022 if cannabis investors remain enthused.
A three-month average trading volume of 337,625 on the OTCMKTS indicates that the market remains liquid enough for quick purchases and small sales.
11. Sundial Growers (SNDL)
At 79 cents per share, SNDL stock is one of the most appealing marijuana penny stocks. Sundial announced a cash cushion of $873 million following a fundraising blitz. This is anticipated to be used for organic expansion and acquisitions in the upcoming quarters.
The company's collaboration with SAF Group is an intriguing move. The partnership plans to invest globally in cannabis-related debt, equity, and hybrid opportunities. Sundial initially contributed $188 million to the joint venture, and recently, the pledge was upped to $350 million. Once the partnership has quality investments, recurring cash flows are likely to result.
Sundial offers an extensive brand portfolio with an emphasis on inhales. The business has increased its sales and marketing activities. If the growth of branded cannabis products is significant, a healthy EBITDA margin is expected to result.
Sundial also bought Inner Spirit Holdings in the recent past. The latter operates 86 cannabis retail outlets across Canada. Inner Spirit reported a 19% adjusted EBITDA margin for the fourth quarter of 2020. The corporation may utilize the retail store network to increase the visibility of its brand.
Sundial appears to be reaching a phase of growth inflection, and this makes SNDL stock medium- to long-term appealing.
Final thoughts
Penny stocks are an excellent method for making money in the stock market, and they are also an excellent strategy to capitalize on conjecture. Whether it's the weeks preceding a prospective FDA ruling, a period of global upheaval (as we've seen recently), or awaiting government decisions, traders of inexpensive stocks tend to play rumors. In this context, marijuana stocks have continued to rise over the past 24 hours, with penny stocks garnering the most attention.
Real-time News
