At the end of last year, marijuana stocks seemed to be in a pretty bad place. With eyes set on 2020, things looked like they could soon get better for the cannabis industry. But very quickly we saw the coronavirus take its toll on marijuana stocks through and through. The result of this is billions in market value lost in only a short period of time. This pot stock loss has been felt not only in the cannabis industry but in the whole of the stock market.
Because of this massive volatility in the industry, investing in cannabis stocks can be quite difficult. But, there are a few strategies and things to look for when searching for a marijuana stock to watch. One of the key principles of investing in cannabis stocks is research. With so many losses occurring in the past few months, finding a cannabis stock with a large balance sheet and low operating expenses is very important.
With this, a company can work to get past this pandemic rather than be exposed to it fully. In addition, it is extremely important to consider what a company is doing to protect its future. With so many cannabis companies doing the same thing, finding one that is different and one with a long term plan, can greatly improve the chances of seeing long term returns. These two cannabis stocks have worked hard to make a name for themselves, but at this point, they still remain quite expensive. This does not mean that they are not cannabis stocks to watch, but rather investors should watch them to see what price action occurs in the foreseeable future.
A Major Cannabis Stock With Some Issues
Aurora Cannabis Inc. (ACB Stock Report) is one of the largest cannabis stocks in the industry. The company has seen a lot of shares held recently by those who trade on the popular platform, Robinhood. Back in the day, Aurora was considered to be the king amongst cannabis stocks. But quickly it started to show massive losses and an even larger amount of overproduction. The company recently closed at around $0.75 per share which may seem low, but considering its business model, it is not. In only a few years, the company has ballooned the number of outstanding shares it has from 15 million to over 1 billion.
Much of the value that the company currently shows was raised through absolutely necessary funding rounds. The company still faces several issues that make it tough to call it a cannabis stock to watch. Regardless, it does remain one of the largest cannabis stocks in the industry. In the future, the company should work to make its production meet up with demand. In addition, it’s future plans are not nearly as concrete as they need to be. With all of these issues in mind, it’s up to the individual investor whether or not there is justification for investing in Aurora Cannabis.
Another Major Marijuana Stock
Cronos Group Inc. (CRON Stock Report) was once considered to be the brainchild of the cannabis market. The company hit a high of around $17 a year ago before dropping substantially in value in only a short period of time. The company famously received a massive investment from the tobacco giant, Altria Group (NYSE:MO). Although having a large amount of free-flowing cash may seem to put the company in the clear, it has not. Although it has a massive amount of potential, the company has only been producing around $23 million in net sales throughout last year. In addition, the company also saw a loss of over $17 million.
The partnership with Altria shows a lot of the real issues with Cronos Group. The company has yet to take full advantage of this money but has rather done little to nothing to improve its own situation. Although the company does remain one of the largest marijuana stocks in the industry, it may not be a marijuana stock to watch at this very moment.