The Top Marijuana Penny Stocks of 2018
One of the best things that happened after the 2016 presidential election was the opening of opportunities for cannabis-related business, which has greatly increased the profitability of marijuana penny stocks.
During the election, a good number of states voted for the marijuana to be legalized to a varying degree. Of all the states that voted, The Washington Post revealed that the state of California served as the bellwether. With almost 12% of the overall American population calling California their home, a major win in this state meant an increase in social acceptance.
California voted for a full recreational marijuana use, which has bolstered the marijuana stocks. In addition, this year marks significant progress in the cannabis industry since Californians will no longer have to carry medical green cards to be able to purchase marijuana as a herbal solution. It should be noted however that regulations vary from one city to the other, although the regulatory environment has substantially loosened.
On top of the social acceptance, there’s the undeniable financial result coming from the industry of botany. As stated at the website of Colorado.gov, the industry of cannabis became a near billion dollar industry in the state of Colorado in 2015, and officially crossed the mark in 2016. In the previous year, green businesses had more than $1.5 billion in revenue.
This is obviously great news for marijuana stocks. With more and more states reporting a budget deficit, the last thing that the Trump administration wants is to slow down the economic progress. After all, he is known for his business acumen.
The federal government may need to reconsider its stance on cannabis, which will greatly have a significant impact on the top marijuana penny stocks.
There are basically eight states that have legalized recreational marijuana use. These are the states of Nevada, Oregon, Massachusetts, Maine, Colorado, Alaska, Washington, and California. Moreover, a handful of states have allowed the regulated use of marijuana for medical purposes. The combined population of all the states mentioned is 65 million, which means that there are now 65 million Americans who live in states that have some form of marijuana legalization.
Aside from the benefit of the skyrocketing value of the marijuana stocks recently, these states are also expected to gain tax revenue from the industry. For instance, in the state of Colorado, the government is said to have collected more than $500 million in tax revenue from the industry since 2014. If you would like to learn more about the economic effects of legalizing marijuana please click the link or get a PDF version sent to your email:
Why Should You Invest in Marijuana Stocks?
The U.S. Marijuana Index has been created in January 2015 and has been fairly volatile. Coming from a 126.98 high in 2015, it steadily fell and reached a bottom in February 2016. After a brief rebound along with a consolidation move around August of 2016, the index showed a pre-presidential election run-up in the hopes that more states would start legalizing marijuana use. In October 2016, the index hit a high of 110.64. Afterward, the index had a pullback and settled at about 50.
The index consists of 15 of the top marijuana stocks that operate in the United States.
Aside from the company’s focused business strategy in the industry of marijuana, the stocks must also meet minimum trading requirements of:
- $30 million minimum market capitalization.
- $600,000 daily trading volume.
- A stock price of at least 10 cents.
Companies that earn revenues of more than $5 million every year are exempted from the listings.
Marijuana Penny Stocks Risks
Aside from the cheap price of penny stocks, people are also drawn to it because of the simple mathematics involved behind – if you purchase shares for $0.20 and if the stock will go up by $0.10, then you will earn a profit of 50%. However, it’s also just as easy to lose money when the shares drop by $0.10 and you lose 50% because these stocks are very volatile.
Risks in the Industry
Volatile and illiquid – these are the two words that often come to mind when talking about marijuana penny stocks. If you will trade them in the OTC exchanges, they also come with huge risks, especially if you are working with companies who want to profit from something illegal. You have to keep in mind that in the United States in general, marijuana is not legal at the federal level. It’s still considered as a schedule 1 narcotic.
Previously, attorney general Jeff Sessions, an expert in the industry of marijuana in the United States, issued an extermination of enforcement of the marijuana laws in states where marijuana is legalized. The marijuana companies took a hit, and understandably, the top marijuana stocks encountered an immense shareholder dump.
There’s some uncertainty as to what could happen with the federal enforcement of US marijuana laws, which often translates to “traders and investors must be crazy to even consider investing into penny stocks and the industry of marijuana in general.”
How to Determine a Good Investment
If you are determined to invest on the top marijuana penny stocks, it’s important to ask yourself certain questions before you decide to go with it. You might think that since pot is popular, you just have to go ahead and invest immediately, but this could put you into serious troubles. Eventually, a guarantee of proven track records among these marijuana companies could mean gambling with your money.
Here are some of the things you may need to ask yourself:
- Do these companies have growing revenue?
- Do they have a strong financial ratio?
- Do they have a working management team?
- Do they have an expanding market share?
- Is the company overvalued?
Also check out this infographic for some tips on how to trade penny stocks:
The best penny stocks 2018:
- Cannabis Strategic Ventures (NUGS)
This marijuana stock has a low float but can make huge moves. In fact, the stock went from $0.15 to a whopping $7 in December, which is a truly substantial move. The stock has had a huge bullish run once, however, there are still possibilities for another run. The stock, just like the rest, totally depends on the situation of the medical marijuana industry in the US. A good news may give this low float stock a huge bullish run.
- Sunset Island Group (SIGO)
The SIGO stock has a very low capitalization in the marijuana stock market. They’re currently in a huge expansion phase and are constructing a 150,000 sq. ft. grow house that has built-in high-end technology. They say that they are expecting a $200 revenue for every foot of the grow space they are building. Currently, their space is at 16k square feet and the potential increase after their expansion to $150,000 sq. ft. could be huge.
- Cannabis Science Inc. (CBIS)
You should know that the interest has multiplied three times to 9 ½ million and is expected to continuously increase. This has become a compressed spring and once it’s released, it could go very high!
All shorties might think they are smart, but they will all turn to scared rats once the CBIS will show to them that they are moving into bigger revenues, more cures and patents. This will usually take place once they start covering the short shares and drive the value to certain levels that haven’t been touched in years.
- Cannabis Sativa Inc. (CBDS)
This company is known for having a truly impressive management team. Their stock value has increased from below $2 per share up to more than $9 in six months. This is a huge increase for the company. The chart produced a solid uptrend, placing this company among the top marijuana stocks you can invest in.
- Medical Marijuana Inc. (MJNA)
A study done in Mexico has shown incredible results regarding this company. Thus, the MJNA is maintaining a worldwide standard for the treatment of seizures. The industry for anti-convulsive drugs has become very large and this small company could soon become one of the major players on marijuana stocks that trade from $50 to $100 per share.
- mCig Limited (MCIG)
The company has reported a 446% increase in revenue during the previous quarter. The expectations of earnings growth could result in a nice bullish run. Their new grow facility in Oregon reflects positively on their share price too. It has to be around the 40s, although it has to be consolidated for a while, which is a healthy move for the stocks.
Everyone is impressed with the significant revenue increase, but the most important thing is actually the net income. This figure is an important factor in determining how well the company is doing. The return to its shareholders is good and if this continues to remain positive and with a possibility to increase, you’ll see an increase in their stock price.
- Mountain High (MYHI)
This company deals with commercial hemp as well as the industry of Cannabidiol products. Mountain High is also a real estate investment company whose main goal is to manage real estate properties. The company has also been focused on buying commercial facilities that can be leased and used by other companies involved in the commercial marijuana market, specifically in the state of Colorado.
- Newgen Concepts Inc. (VPOR)
The company has an important place in the industry of marijuana. Its fundamentals are improving constantly and the stock chart is very promising, trending quite near the trend line. This company is a good swing trade candidate.
- Global Cannabis Application (FUAPF)
When people usually hear the term “blockchain” they immediately associate it with cryptocurrencies and Bitcoin. Indeed, the blockchain has catalyzed the entire digital investing market allowing people from all over the world to virtually trade coins. However, this groundbreaking technology also comes with its own practical uses, which is where the Global Cannabis Application comes in.
Although favorable legislation has been a boon to the marijuana stocks, most of these gains are short-lived. In a bigger part, this is mainly because both the government bodies, as well as the cannabis-related businesses, are getting into uncharted territory. Several regulatory agencies are in particular concerned with accounting for the cannabis supply chain and they want to ensure that the botanical inventory comes from both the legal vendors and legal providers.
- Cannabis Wheaton (CBWTF)
The last and certainly not the least on this list of the top marijuana stocks is the Cannabis Wheaton. A lot of you have probably heard about the Wheaton Precious Metals Corp., which was formerly known as the Silver Wheaton. The company deals in precious metals streaming which is an agreement with a miner to purchase metal production at a certain price. For as long as it’s run the right way, streaming can become a profitable venture.
The Cannabis Wheaton takes a similar approach in the marijuana industry. Indeed, they are the first-ever streaming company in the industry with an enormous potential. In addition, Canada is a weed-friendly country, which has legalized the use of medical marijuana since 2001.
Pot Stocks Can’t Have Bank Accounts
Financial institutions, especially banks, will have to face the American government on their clients’ behalf. As of the moment, marijuana is considered illegal under the federal law. Therefore, selling marijuana is clearly a violation of the law and prohibits companies from opening a bank account.
Cannabis Stocks Can’t Take Tax Deductions
Because these companies are seen by the Federal Government as companies that sell illegal products, they do not qualify for standard tax deductions, which other businesses qualify for. The IRS is like a friend who has brought three Zimas to a party but left once the music got too loud.
Top Pot Stocks Are Losing Money
The industry of marijuana is still too young and most of the marijuana penny stocks are valued according to the future expectations instead of their cash flow. It’s important to know that this is very similar to the tech boom that happened in the early 2000. Some of those companies became titans of the industry, while others left the industry too early. Remember that even the top marijuana stock of all, the GW Pharmaceuticals stock, that has an awesome drug that reduces seizure frequency among children, may not be seeing any profit in the near future.