The coronavirus has caused one of the largest stock market panics in over a decade. Because of it, we have seen many of the leading marijuana stocks to watch shrink in value by over 40%. Thee most recent market volatility is not only related to cannabis stocks, as it has affected the whole world’s markets respectively. Often times, when a company is at a low price, it signals investors to come in and buy it at a bargain. This may seem like the case with many pot stocks right now, but it appears as though there could be much more volatility on the horizon. One of the major factors to look for when searching for a pot stock with some potential is one with a large amount of free cash.
These companies have the greatest survival rate during times as volatile as these. But, the market seems to be extremely up and down right now. This means that it is a very difficult time to begin investing in marijuana stocks. But, for those who are seasoned investors, now could be a time to refine one’s strategy to better suit the next stage of the cannabis industry. Without a doubt, the coronavirus will shift the market forever. Whether this shift will be known sooner or later, remains up in the air. For now, all we can do is look for cannabis stocks that have the most potential with their underlying business models.
A U.S. MSO Pot Stock With Strong Financials
Curaleaf Holdings (CURLF Stock Report) (CURA Stock Report) is one of the most popular multi-state operators in the U.S. Along with most of the market, the company has lost quite a lot of its stock value in the past year. In specific, the company has seen over 60% value lost during that time. Despite this mostly speculative value loss, the company is in quite a great position in terms of its business model. One thing to keep in mind is that it may take time to see the company make actual gains due to the uncertainty surrounding the next two months of pretty much everything.
After the coronavirus pandemic is contained, we may see the company begin to shoot up in value. In its third-quarter results, the company posted that it had more than $90 million in free cash. With its spending at only around 30% of that, it looks like the company has quite a lot of room to grow. Moving forward, we can only wait to see what happens in the next few months to see where Curaleaf Holdings could go.
An Extraction Based Cannabis Stock
The Valens Company (VLNCF Stock Report) (VLNS Stock Report) is another leading alternative cannabis stock in the industry. The company operates by producing cannabis extracts for other marijuana-based companies. Because of this, Valens is not subject to the massive volatility that the pure-play pot stocks are. In addition, the company has a large amount of semi-long term contracts which means that its business model is relatively predictable for the near future.
While the company has lost around 50% of its value in the past month, prior to the coronavirus, the company was showing some serious upward momentum. Much of this comes after Canada only recently legalized the use of extract products. This occurred back in January, but we have not been able to see the full effect due to the current state of the world. But, the hopes are that as things calm down, The Valens Company can once again begin to find its stride. Until that time, things continue to look very volatile.