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. (which we own shares in), Cronos Group Inc., and Tilray Inc.. Many big marijuana companies have continued to post sizable net losses as they focus on investing in equipment to speed up revenue growth, which remains strong despite the economic disruption spurred by the pandemic.
Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have dramatically outperformed the broader market. MJ has provided a total return of 53.7% over the past 12 months, more than double the Russell 1000’s total return of 21.1%, as of February 23, 2021
Best Value Marijuana Stocks
Value investing is a factor-based investing strategy in which you pick stocks that you believe are trading for less than what they are intrinsically worth, usually by measuring the ratio of the stock’s price to one or more fundamental business metrics. A widely accepted value metric is the price-to-sales ratio (P/S Ratio). This metric is used instead of price-to-earnings ratio (P/E Ratio) when companies are starting out and not consistently profitable yet. Value investors believe that if a business is cheap compared to its intrinsic value, in this case as measured by its P/S ratio, the stock price may rise faster than others as the price comes back in line with the worth of the company.
Fastest Growing Marijuana Stocks
Growth investing is a factor-based investing strategy in which you invest in businesses that you believe will grow significantly faster than the market as a whole. There are different growth metrics, but one of the most widely used is growth in revenue, also called sales. Sales growth is often used as a metric instead of profit growth for companies that are just starting out, and are not yet consistently profitable. Growth investors believe that if a company consistently grows revenue faster than the market as a whole, its stock price will rise as investors seek to get a share of future profits. These are the stocks with the highest YOY revenue growth for the most recent quarter.
Marijuana Stocks with the Most Momentum
Momentum investing is a factor-based investing strategy in which you invest in a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks which 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.
